[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]





H.R. 2731, THE OCCUPATIONAL SAFETY AND HEALTH SMALL EMPLOYER ACCESS TO 
                          JUSTICE ACT OF 2003

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                                 of the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                           September 17, 2003

                               __________

                           Serial No. 108-32

                               __________

  Printed for the use of the Committee on Education and the Workforce



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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN A. BOEHNER, Ohio, Chairman

Thomas E. Petri, Wisconsin, Vice     George Miller, California
    Chairman                         Dale E. Kildee, Michigan
Cass Ballenger, North Carolina       Major R. Owens, New York
Peter Hoekstra, Michigan             Donald M. Payne, New Jersey
Howard P. ``Buck'' McKeon,           Robert E. Andrews, New Jersey
    California                       Lynn C. Woolsey, California
Michael N. Castle, Delaware          Ruben Hinojosa, Texas
Sam Johnson, Texas                   Carolyn McCarthy, New York
James C. Greenwood, Pennsylvania     John F. Tierney, Massachusetts
Charlie Norwood, Georgia             Ron Kind, Wisconsin
Fred Upton, Michigan                 Dennis J. Kucinich, Ohio
Vernon J. Ehlers, Michigan           David Wu, Oregon
Jim DeMint, South Carolina           Rush D. Holt, New Jersey
Johnny Isakson, Georgia              Susan A. Davis, California
Judy Biggert, Illinois               Betty McCollum, Minnesota
Todd Russell Platts, Pennsylvania    Danny K. Davis, Illinois
Patrick J. Tiberi, Ohio              Ed Case, Hawaii
Ric Keller, Florida                  Raul M. Grijalva, Arizona
Tom Osborne, Nebraska                Denise L. Majette, Georgia
Joe Wilson, South Carolina           Chris Van Hollen, Maryland
Tom Cole, Oklahoma                   Tim Ryan, Ohio
Jon C. Porter, Nevada                Timothy H. Bishop, New York
John Kline, Minnesota
John R. Carter, Texas
Marilyn N. Musgrave, Colorado
Marsha Blackburn, Tennessee
Phil Gingrey, Georgia
Max Burns, Georgia

                    Paula Nowakowski, Staff Director
                 John Lawrence, Minority Staff Director
                                 ------                                

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                   CHARLIE NORWOOD, Georgia, Chairman

Judy Biggert, Illinois, Vice         Major R. Owens, New York
    Chairman                         Dennis J. Kucinich, Ohio
Cass Ballenger, North Carolina       Lynn C. Woolsey, California
Peter Hoekstra, Michigan             Denise L. Majette, Georgia
Johnny Isakson, Georgia              Donald M. Payne, New Jersey
Ric Keller, Florida                  Timothy H. Bishop, New York
John Kline, Minnesota                George Miller, California, ex 
Marsha Blackburn, Tennessee              officio
John A. Boehner, Ohio, ex officio


                                 ------                                
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on September 17, 2003...............................     1

Statement of Members:
    Norwood, Hon. Charlie, Chairman, Subcommittee on Workforce 
      Protections, Committee on Education and the Workforce......     1
        Prepared statement of....................................     3
    Owens, Hon. Major R., Ranking Member, Subcommittee on 
      Workforce Protections, Committee on Education and the 
      Workforce..................................................     4

Statement of Witnesses:
    Drummond, Anita, Senior Director, Legislative and Regulatory 
      Affairs, Associated Builders and Contractors, Arlington, 
      Virginia...................................................    18
        Prepared statement of....................................    20
    Knott, James, Riverdale Mills, Northbridge, Massachusetts, on 
      behalf of the National Association of Manufacturers........    10
        Prepared statement of....................................    12
    Nelson, Scott, Public Citizen Litigation Group, Washington, 
      DC.........................................................    15
        Prepared statement of....................................    16
    Robson, Lynn, Robson's Greenhouse, Belleville, Michigan, on 
      behalf of the American Farm Bureau.........................     6
        Prepared statement of....................................     8

Additional materials supplied:
    Johnson, Randel K., Vice President, Labor, Immigration & 
      Employee Benefits, U.S. Chamber of Commerce, Letter 
      submitted for the record...................................    40
    Josten, R. Bruce, Executive Vice President, Government 
      Affairs, U.S. Chamber of Commerce, Letter submitted for the 
      record.....................................................    37
    Kendrick, James ``Skipper'', CSP, President, American Society 
      of Safety Engineers, Letter submitted for the record.......    44
    McCracken, Todd O., President, National Small Business 
      Association, Letter submitted for the record...............    38
    OSHA Fairness Coalition, Letter submitted for the record.....    38
    Samuel, William, Legislative Director, American Federation of 
      Labor and Congress of Industrial Organizations (AFL-CIO), 
      Statement submitted for the record.........................    46
    Shimabukuro, Jon O., Legislative Attorney, American Law 
      Division, Congressional Research Service, Memorandum on 
      ``Covered Parties Under the Equal Access to Justice Act,'' 
      Submitted for the record...................................    34
        Memorandum on ``Size Standards and Covered Employers 
          Under Selected Statutes,'' Submitted for the record....    33

 
H.R. 2731, THE OCCUPATIONAL SAFETY AND HEALTH SMALL EMPLOYER ACCESS TO 
                          JUSTICE ACT OF 2003

                              ----------                              


                     Wednesday, September 17, 2003

                     U.S. House of Representatives

                  Subcommittee on Workforce Protections

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to call, at 2 p.m., in room 
2175, Rayburn House Office Building, Hon. Charlie Norwood 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Norwood, Biggert, Kline, Owens, 
and Majette.
    Staff Present: Stephen Settle, Professional Staff Member; 
Loren Sweatt, Professional Staff Member; Chris Jacobs, Staff 
Assistant; Kevin Smith, Senior Communications Counselor; Kevin 
Frank, Professional Staff Member; and Deborah L. Samantar, 
Committee Clerk/Intern Coordinator.
    Peter Rutledge, Minority Senior Legislative Associate/
Labor; Maria Cuprill, Minority Legislative Associate/Labor; and 
Margo Hennigan, Minority Legislative Assistant/Labor.
    Chairman Norwood. A quorum being present, the Subcommittee 
on Workforce Protections of the Committee on Education and the 
Workforce will now come to order. We are holding this hearing 
today to hear testimony on H.R. 2731, ``The Occupational Safety 
and Health Small Employer Access to Justice Act of 2003.''
    Under the Committee rule 12(b) opening statements are 
limited to the Chairman and the Ranking Minority Member of the 
Subcommittee. Therefore, if other Members have statements they 
will be included in the hearing record.
    With that, I ask a unanimous consent for the hearing record 
to remain open 14 days to allow Member's statements and other 
extraneous material referenced during the hearing to be 
submitted in the official hearing record. Without objection, so 
ordered.

     OPENING STATEMENT OF HON. CHARLIE NORWOOD, CHAIRMAN, 
 SUBCOMMITTEE ON WORKFORCE PROTECTIONS, COMMITTEE ON EDUCATION 
                       AND THE WORKFORCE

    Chairman Norwood. Good afternoon and welcome, and my 
apologies for being a minute late. We are assembled today to 
conduct a legislative hearing on H.R. 2731, the Occupational 
Safety and Health Small Employer Access to Justice Act of 2003. 
H.R. 2731 proposes that very small employers be able to recover 
attorney's fees and costs in appropriate circumstances when 
they prevail in litigation instituted by OSHA.
    This is in fact the second hearing on this very important 
matter. This past June the Subcommittee held a hearing to take 
testimony on the single provision contained in H.R. 1583. As 
background I decided to introduce H.R. 2731 as a freestanding 
bill because I thought we needed to learn more about the impact 
of awarding attorney's fees and costs to small business owners 
in workplace safety and health litigation. I did not want the 
importance of this issue to be lost among other issues or 
receive less focus than is appropriate.
    Now, this need for additional information grew in large 
part from some very disturbing testimony we received from small 
employers during the June 2003 hearing. Specifically, we heard 
two small business owners and an expert in the field of 
workplace safety and health law passionately argue that they 
believed OSHA was using the threat of litigation as a way to 
gain financial leverage over them and other small employers 
like them. What we were told painted a picture of small 
employers receiving OSHA citations, and with the firm belief 
that they had not violated any standard or duty to their 
employees, they desperately made efforts to defend themselves 
and save their representations. In one case, we were told that 
the employer promptly contacted a lawyer following the receipt 
of his citation and asked about the cost of obtaining help in 
defending himself against OSHA lawyers. This employer learned 
something that should not surprise any of us, that competent 
lawyers don't come cheaply, and that even in the simplest of 
cases that these fees could easily climb to unaffordable levels 
for many small business operations in America.
    In contrast, we learned that the word is on the street that 
more often than not OSHA is often willing to settle the cases 
far under the proposed penalty levels. They are willing to do 
this to avoid the burden of litigation. Economically, we were 
told this translates to a very simple equation. Often all an 
employer has to do is admit that they have violated the law and 
pay a small fine regardless of whether they in their hearts and 
minds believe that they are innocent. If they are willing to 
abandon their principles they can get off with a fine 
substantially less than the cost of litigation.
    This is certainly not what I think Congress intended when 
it crafted the Occupational Safety and Health Act. This is a 
Hobson's choice that insults our concept of fairness in 
government instituted litigation. There is a gain for lawyers, 
not small business owners who are trying to keep their heads 
above water in a competitive marketplace so that they can pay 
their employees salaries. Think about it. Is this the type of 
intimidating tactics we want associated with OSHA at a time 
when Congress has directed them to partner with small 
businesses and to help them reduce their rate of injury and 
illness through compliance assisted efforts?
    As I said, however, I am speaking today on the basis of 
what we have heard so far. But this is why I think it is so 
important that we learn more, so I have set three objectives 
for this hearing.
    First, I want to develop a better understanding of why 
small employers believe so passionately that OSHA is using 
litigation for financial leverage to force them to admit fault 
even when there is none present. The burden of proof is on the 
Secretary to prove a violation of the Act and I understand that 
no one in OSHA wants to be proven wrong and unjustified in 
their actions. But sweeping mistakes under the rug through the 
use of financial leveraging is wrong and should not be 
tolerated.
    Second, in terms of litigation directed at small employers, 
we need to know whether the threat of having to pay attorneys 
fees would be enough to force OSHA to pay more fairly and bring 
this into a better balance. Understand the last thing in the 
world we want is to create an incentive for OSHA to avoid 
instituting meritorious cases. But will the possibility of 
having to pay attorney's fees and costs force OSHA to be just a 
bit more selective in their pursuit of nonmeritorious or 
marginal cases?
    Last, if we determine that the award of attorney's fees to 
us provides some incentive for a more fair administration of 
justice, where should we draw the line on whom should we be 
able to recover? Is 1.5 million in net worth an effective 
threshold? How does this figure work in various industry 
sectors? And what would be the most cost effective threshold to 
bring this into balance and achieve a desired fairness?
    I hope we can answer some of these questions from the side 
of the victims of this practice today because the next step is 
to get answers from OSHA lawyers about these practices.
    In closing, I leave everyone with this thought. It seems to 
me that if OSHA is not pursuing frivolous litigation in cases 
on the margin on merit, if they are not using these financial 
leveraging techniques then this legislation will have no impact 
on OSHA at all. It shouldn't cost OSHA one red cent if all 
these cases are legally sound.
    [The prepared statement of Chairman Norwood follows:]

Statement of Hon. Charlie Norwood, Chairman, Subcommittee on Workforce 
         Protections, Committee on Education and the Workforce

    Good afternoon and welcome.
    We are assembled today to conduct a legislative hearing on H.R. 
2731, the ``Occupational Safety and Health Small Employer Access to 
Justice Act of 2003.
    H.R. 2731 proposes that very small employers be able to recover 
attorney's fees and costs, in appropriate circumstances, when they 
prevail in litigation instituted by OSHA.
    This is, in fact, a second hearing on this very important measure. 
This past June, this Subcommittee met to take testimony on H.R. 1583, 
the ``Occupational Safety and Health Fairness Act of 2003.'' The 
current content of HR 2731 was then a single provision contained in HR 
1583.
    As background, I decided to introduce H.R. 2731 as a free-standing 
bill because I thought we needed to learn more about the impact of 
awarding attorney's fees and costs to small business owners in 
workplace safety and health litigation. I did not want the importance 
of this issue to be lost among other issues, or receive less focus than 
is appropriate.
    Now, this need for additional information grew, in large part, from 
some very disturbing testimony we received from small employers during 
the June 2003 hearing. Specifically, we heard two small business owners 
and an expert in the field of workplace safety and health law, 
passionately argue that they believed OSHA was using the threat of 
litigation as a way to gain financial leverage over them and other 
small employers like them.
    What we were told painted a picture of small employers receiving 
OSHA citations and, with a firm belief that they had not violated any 
standard or duty to their employees, they desperately made efforts to 
defend themselves and save their reputations.
    In one case, we were told that the employer promptly contacted a 
lawyer following the receipt of his citation, and asked about the cost 
of obtaining help in defending himself against OSHA's lawyers. This 
employer learned something that should not surprise any of us--that 
competent lawyers don't come cheaply, and that even in the simplest of 
cases, that these fees could easily climb to unaffordable levels for 
many small business operations.
    In contrast, we learned that the word is on the street that more 
often than not, OSHA is often willing to settle the cases far under the 
proposed penalty levels. They are willing to do this to avoid the 
burden of litigation.
    Economically, we were told, this translates to a very simple 
equation. Often, all an employer has to do is admit that they have 
violated the law, and pay a small fine, regardless of whether they, in 
their hearts and minds, believe they are innocent. If they are willing 
to abandon their principles, they can get off with a fine substantially 
less than the cost of litigation.
    This is certainly not what I think Congress intended when it 
crafted the Occupational Safety and Health Act. This is a ``Hobson's 
choice'' that insults our concept of fairness in government instituted 
litigation--it is a game for lawyers, not small business owners who are 
trying to keep their heads above water in a competitive marketplace so 
they can pay their employee's salaries.
    Think about it--is this the type of intimidating tactics we want 
associated with OSHA at a time when Congress has directed them to 
partner with small business and help them reduce their rates of injury 
and illness through compliance assistance efforts?
    As I said, however, I am speaking today on the basis of what we 
have heard so far. But, this is why I think it is so important that we 
learn more.
    So, I have set three objectives for this hearing: First, I want to 
develop a better understanding of why small employers believe so 
passionately that OSHA is using litigation for financial leverage to 
force them to admit fault, even when there is none present. The burden 
of proof is on the Secretary to prove a violation of the Act--and, I 
understand that no one at OSHA wants to be proven wrong and unjustified 
in their actions. But, sweeping mistakes under the rug through the use 
of financial leveraging is wrong and cannot be tolerated.
    Second, in terms of litigation directed at smaller employers, we 
need to know whether the threat of having to pay attorney's fees would 
be enough to force OSHA to play more fairly and bring this into better 
balance. Understand, the last thing in the world we want is to create 
an incentive for OSHA to avoid instituting meritorious cases. But, will 
the possibility of having to pay attorney's fees and costs force OSHA 
to be just a bit more selective in their pursuit of non-meritorious and 
marginal cases?
    Lastly, if we determine that the award of attorney's fees does 
provide some incentive for a more fair administration of justice, where 
should we draw the line on whom should be able to recover. Is $1.5 
million in net worth an effective threshold? How does this figure work 
in various industry sectors? And, what would be the most cost effective 
threshold to bring this into balance and achieve a desired fairness.
    I hope we can answer some of these questions from the side of the 
victims of this practice today, because the next step is to get answers 
from OSHA's lawyers about these practices.
    In closing, I leave everyone with this thought--it seems to me that 
if OSHA is not pursuing frivolous litigation and cases on the margin of 
merit--if they are not using these financial leveraging techniques--
then this legislation will have no impact at all on OSHA. It shouldn't 
cost OSHA one red cent if all these cases are legally sound.
                                 ______
                                 
    Chairman Norwood. I would now turn to my friend from New 
York, Mr. Owens, for any comments he may care to make in his 
opening statement. Mr. Owens.

   OPENING STATEMENT OF HON. MAJOR R. OWENS, RANKING MEMBER, 
 SUBCOMMITTEE ON WORKFORCE PROTECTIONS, COMMITTEE ON EDUCATION 
                       AND THE WORKFORCE

    Mr. Owens. Thank you, Mr. Chairman. I too want to welcome 
the witnesses for the afternoon and tell them that I hope that 
our voting patterns don't inconvenience you too much this 
afternoon. Second, I want to commend my Republican colleagues 
for finally getting around to holding a hearing on this issue. 
Normally hearings are held first before legislation is 
considered. That has not been the case with this issue.
    In the 105th Congress, this Subcommittee held hearings on 
and considered legislation to require the National Labor 
Relations Board to pay the attorney's fees and costs of small 
employers and unions in cases in which the Board did not 
prevail. That ill conceived legislation barely passed the House 
202 to 200 and would have been defeated was it not for the fact 
that a number of Democratic Members had accompanied President 
Clinton on a trip to Africa. The bill died in the Senate 
without even a hearing.
    In the subsequent Congress, H.R. 1987 was introduced but 
differed from its predecessor in part because it now required 
OSHA as well as the Labor Board to pay attorney's fees and 
costs to certain employers in any case in which the agency did 
not prevail. H.R. 1987 was reported by the Subcommittee on a 
party line vote but it was never taken to the floor. No 
hearings were ever held on H.R. 1987. In fact the Republicans 
sought to impose a new standard on OSHA that would have made it 
significantly more difficult for the agency to protect workers 
without ever creating any type of record to justify that 
change.
    I therefore want to commend Chairman Norwood for finally 
getting around to holding a hearing on this issue, though I 
note that the first hearing on this should have been held 4 
years ago. We are 4 years and 15 minutes late today, but at 
least democracy is now moving forward.
    The issue before us is whether OSHA, apart from all other 
Federal agencies, should be required to pay attorney's fees 
even in cases where the agencies is substantially justified in 
bringing the charge. And as in all cases they would not bring a 
charge if it was not justified. Generally Federal agencies may 
be required to pay opposing parties' attorney's fees if the 
agency's position is not substantially justified. Under H.R. 
2731, OSHA would be required to pay certain employers' 
attorney's fees in any case or proceeding in which it did not 
prevail regardless of the reason why the agency did not prevail 
and even if OSHA is substantially justified in bringing the 
complaint.
    As I have said, this is the not the first time we have had 
to consider this issue. In my view the likely consequence of 
H.R. 2731 is that OSHA would be less likely to issue complaints 
against those employers. More safety and health violations will 
go uncorrected and more workers may be injured or killed as a 
consequence. There is no private right of action under the OSHA 
Act. If OSHA prevails to enforce the law, workers have no other 
means of doing so. In effect H.R. 2731 appears to place a 
higher priority on compensating employers for the legal fees 
than on protecting the safety and health of workers.
    I am interested in what today's witnesses will have to say 
on this matter, but I have very serious reservations regarding 
this legislation.
    Thank you very much, Mr. Chairman. I yield back the time 
and we must go to vote.
    Chairman Norwood. I thank the witnesses for your patience. 
If you will excuse us, we will recess for three votes. I 
apologize to you. It is just the life we lead up here and we 
will be back just as fast as we can. I am sure we will be the 
first ones back. We will stand in recess.
    [recess.]
    Chairman Norwood. We have a very distinguished panel of 
witnesses before us today and a very patient panel of 
witnesses, and we thank you all very much and apologize to you 
for the disruptions. If I may, I would like to introduce you to 
the Subcommittee.
    Our first witness is Mr. Lynn Robson, owner of Robson's 
Greenhouse, which is located on a 10-acre farm in Belleville, 
Michigan. The greenhouse was founded in 1929 by his father 
Robert and the third generation of Robsons is presently 
learning the family trade. The Robson family does most of the 
work themselves, building expansions to their greenhouses over 
the off season and relying on several seasonal workers during 
the early spring. Mr. Robson is testifying on behalf of the 
American Farm Bureau.
    We welcome our second witness, Mr. James Knott, Sr., 
President and Chairman of the Board, Riverdale Mills 
Corporation, which is located in Northbridge, Massachusetts. 
Mr. Knott's company produces wire mesh for lobster traps and 
prisons and Mr. Knott has been in the lobster industry for over 
6 decades. Mr. Knott is testifying on behalf of the National 
Association of Manufacturers (NAM). We welcome you, sir.
    Mr. Scott Nelson is an attorney and Acting Director with 
Public Citizen Litigation Group in Washington, D.C. He has also 
served in private practice with the firm of Miller, Cassidy, 
Larocca and Lewin. Mr. Nelson holds undergraduate degrees and 
law degrees from Harvard University.
    Our final witness is Ms. Anita Drummond, Director of Legal 
and Regulatory Affairs for the Associated Builders and 
Contractors in Arlington, Virginia. She has previously worked 
in private practice and as an advocate and assistant chief 
counsel for the Small Business Administration.
    Before the witnesses begin their testimony I would like to 
remind all the Members that we will be asking questions after 
the entire panel has testified. In addition, Committee rule 2 
imposes a 5-minute limit on all questions.
    Before you ladies and gentlemen is a timer. If you will pay 
some attention to that, red, caution and green. I pay some 
attention to it too, but I know you have gone to great trouble 
and expense and distance to be here so I try to give you as 
much leeway as I can once it turns red, but be aware there is a 
limit. With that, Mr. Robson we would like to start with you, 
sir, and we would love to hear your testimony.

  STATEMENT OF LYNN ROBSON, ROBSON'S GREENHOUSE, BELLEVILLE, 
        MICHIGAN, ON BEHALF OF THE AMERICAN FARM BUREAU

    Mr. Robson. Good afternoon, Chairman Norwood. My name is 
Lynn Robson. On behalf of the Michigan Farm Bureau I would like 
to thank you for the opportunity to testify in support of H.R. 
2731. I own and manage my own 10-acre nursery in Belleville, 
Michigan. My father founded the business in 1929. My sons who 
are planning to take over 1 day are now learning the family 
trade. We grow bedding plants and potted plants for markets and 
direct sale. We are known for our petunias.
    For much of the year the family does all the work 
themselves. During the early spring we employ no more than six 
or seven seasonal workers to help water and market the plants. 
Last August my family decided to build an addition to the 
greenhouse. As with most family farms, we are building in the 
off season. That is when the trouble started. Tim, a good 
friend of mine who had come by to visit, was lending me a hand 
in building the greenhouse. An inspector from Michigan 
Department of Consumer Services--that is our OSHA--drove up. 
The inspector informed us that we had violated a construction 
lift standard. You see, while we were visiting Tim had climbed 
on a pallet secured to a tractor and was helping me bolt 
together the frame of the greenhouse.
    By the way, in agriculture it is customary when a visitor 
drops by the farm to lend a helping hand. Neither Tim nor I 
were doing anything dangerous. It is common practice among 
family farmers. It is the way that we have always done things. 
That is why I was surprised with the inspector's reaction. I 
tried to explain that I am not a contractor, I am just a small 
farmer. I also explained that he was not and has not been and 
will not be my employee. He was just visiting and doing what 
all of us do in the industry, which is help each other.
    A few weeks later I received a ticket in the mail violating 
something called general duty clause, which I still haven't a 
clue of what that means. I thought I was being cited for a man 
lift violation. I didn't even have any employees at the time. 
In August it is in the off season.
    A few points. First, I thought I was supposed to follow the 
agriculture standards. That is what I have always been 
following. I would like to think that I am doing a good job. I 
have never been cited before or had to pay any Workman's Comp 
claim. Most of my employees have been with me more than 10 or 
15 years so I figure I must be doing something right.
    Second, I am still not clear on the legal charges against 
me or what I am supposed to do. I run a very small, safe 
operation. Everybody knows that. I guess the inspectors 
eventually figured that out because they cut my fine in half. 
They also told me that they want to meet with me and talk about 
a settlement. But they keep rescheduling the meeting. It has 
been more than a year now.
    Third, I have talked about getting a lawyer. It would cost 
less to pay the fine and be done with it, but I don't think I 
have done anything wrong. It cuts against the grain to pay a 
fine when I feel I am innocent. I have also asked whether I 
should recover any legal fees. Why shouldn't OSHA have to pay 
it if I am proven innocent? Everybody tells me that it is a 
possibility, but it might just complicate matters.
    Last and more importantly, I care when OSHA claims that I 
have created a hazard. In a small community people care about 
what friends and family and employees and the general community 
think about your business. I would never put anybody in harm's 
way, especially my family. They do most of the work. I believe 
in safety and health. I believe in doing what is right, but I 
also believe OSHA should do what is right. Any time a small 
farmer like me receives a citation there are very serious 
consequences.
    I wish I could describe how disruptive this whole process 
has been. I am here today because there are very few 
consequences. OSHA inspectors make mistakes. It is far too easy 
for the government to keep the pressure up if I admit I am 
wrong regardless of whether I believe it in my heart. So I am 
going to fight as long as I can. It is the principle of the 
matter. I don't think the government should be allowed to 
change the rules in the middle of the game. If they want to 
impose construction standards on farmers, then fine. But don't 
come at me through the back door. Come at me straight.
    More importantly, many small farmers are facing similar 
situations today. It is happening to me and it is happening to 
them. The problem is most of them are not going to fight when 
they should. It is simply easier to pay the ticket. I am here 
today because I don't think that is right. I don't think it is 
right to deny small farmers their day in court just because it 
is easier. That is why small farmers across America will 
support H.R. 2731. It will help level the playing field against 
the cause of OSHA to think about the consequences of their 
actions.
    I would also urge the Subcommittee to raise the net worth 
threshold. In my industry farmers are asset rich but cash poor. 
I am a very small farmer and barely qualify. I have spoken with 
other small farmers and they don't feel they might qualify. Mr. 
Chairman, if there is any way to raise the threshold I think 
many farmers would benefit.
    Thank you, Mr. Chairman, for your leadership in introducing 
this bill. I would encourage the Subcommittee to follow your 
leadership and pass it swiftly. Thank you for your time.
    [The prepared statement of Mr. Robson follows:]

Statement of Lynn Robson, Belleville Greenhouse, Belleville, Michigan, 
                 on behalf of the American Farm Bureau

    My name is Lynn Robson. On behalf of the American Farm Bureau 
Federation, I would like to thank you for this opportunity to testify 
in support of H.R. 2731, the OSHA Small Employer Access to Justice Act.
    I own and manage a small, 10-acre nursery in Belleville, Michigan. 
My father founded the business in 1929. My sons, Nicholas and Kevin, 
are planning to take over one day and are now learning the family 
trade. We grow bedding and potted plants for local markets and direct 
sales. We are known for--and are especially proud of--our petunias.
    For much of the year, my family does all the work themselves. 
During early spring, no more than six or seven seasonal workers are 
employed to help water and market the plants.
    Last August, my family decided to build an addition to a 
greenhouse. As with most family farms, we were building the addition in 
the off-season.
    That's when the trouble started. Tim, a good friend of mine, who 
had come by to visit, was lending me a hand when an inspector from 
Michigan's Department of Consumer and Industry Services--that's our 
OSHA--drove up.
    The inspector informed us that I had violated a construction lift 
standard. You see, while he was visiting, Tim had climbed onto a pallet 
secured to a tractor, and was helping me bolt together the frame of the 
greenhouse.
    As an aside, in agriculture, it is customary when a visitor drops 
by for them to lend a hand. Neither Tim nor I thought we were doing 
anything dangerous. It's a common practice that most family farmers 
undertake. It's the way we have always done things.
    That is why I was so surprised when the inspector informed me of a 
violation. I tried to explain that I was not a contractor, 
subcontractor or any other ``-or'' related to the construction 
industry. I'm just a small farmer. I also explained that Tim was not, 
has not been, and will not be, my employee. He was just visiting and 
doing what all of us in this industry do--help each other.
    A few weeks later I received a ticket in the mail for violating 
something called the ``general duty'' clause. And it's a serious 
violation of the general duty clause. I'm still not sure what that 
means. I thought I was being cited for violating a construction 
standard. I didn't even have employees at the time. August is the off-
season.
    A few points: First, I thought that I was supposed to follow the 
agriculture standards. That is what I've been following, and I would 
like to think I'm doing a good job. I routinely have safety inspections 
by my family, insurance companies, and consultants. I have never been 
cited before, had an injury, or had to pay a worker's compensation 
claim. The average length of employment of my employees is more than 15 
years, so I figure I must be doing something right.
    Secondly, I am still unclear about the legal charges against me, 
and what I am or was supposed to do. I run a very small, very safe 
operation. Everyone knows that. I guess the inspectors eventually 
figured that out, because they have since cut the fine in half. They 
have also told me they want to meet to talk about settlement, but they 
keep rescheduling the meeting. It's been more than a year now.
    Thirdly, I have talked about getting a lawyer. I learned it would 
cost far less to just pay the fine and be done with it. But I don't 
think I've done anything wrong and it cuts against the grain to pay a 
fine when I feel I am innocent. I have also asked whether I should try 
to recover my legal fees. Why shouldn't OSHA have to pay if I'm proven 
innocent? The answer: It's possible but I may just complicate matters.
    Lastly, and more importantly, I care very, very much when OSHA 
claims that I have created a hazard. It's a charge that most of 
America's small farmers would want to fight. In a small community, 
people care about what friends, family, employees and the general 
community think about a business owner. I would never subject anyone to 
hazards, especially my family. They do most of the work we are talking 
about. I believe in safety and health. I believe in doing what is right 
but I also believe in OSHA doing what is right.
    Any time a small farmer like me, or any other small employer 
receives a citation, there are very serious consequences. I wish I 
could describe just how disruptive this whole process has been. I am 
here today because I now believe there are few consequences for OSHA 
inspectors when they make mistakes. It is far too easy for the 
government to keep up the pressure until I agree to admit doing 
something wrong, regardless of whether I believe in my heart I did.
    So I am going to fight as long as I can. It's the principle of the 
matter. I don't think the government should be allowed to change the 
rules in the middle of the game. If they want to impose construction 
standards on farmers, then fine, but don't come at me through the back 
door. Come at me straight.
    More importantly, many small farmers are facing similar situations 
today. I am like every small farmer in America. If this is happening to 
me, it's happening to them. The problem is that most of them are not 
going to fight when they should. It is simply more expedient to pay the 
ticket. Just an hour consultation with a lawyer can cost more.
    I am here today because I don't think that's right. I don't think 
it's right to deny small farmers their day in court, just because of 
expedience. That is why small farmers across America will support H.R. 
2731. It will help level the playing a field a bit and cause OSHA 
personnel to think about the consequences of their actions.
    Thank you, Mr. Chairman, for your leadership in introducing this 
bill. I would encourage the committee to follow your leadership and 
pass it swiftly.
    Additionally, I would urge the committee to raise the net-worth 
threshold. In my industry, we have a saying: farmers are asset rich but 
cash poor. I'm a very small farmer, and have spoken with others. Mr. 
Chairman, I think many family farmers would benefit from such an 
increase.
    Thank you all for your time.
                                 ______
                                 
    Chairman Norwood. Thank you, Mr. Robson. I can't wait to 
get to questions with you. I was in the nursery business too. I 
have been in that bucket a lot of times on that tractor. I 
understand.
    Mr. Knott, it is now your turn to testify, sir.

    STATEMENT OF JAMES KNOTT, RIVERDALE MILLS, NORTHBRIDGE, 
    MASSACHUSETTS, ON BEHALF OF THE NATIONAL ASSOCIATION OF 
                         MANUFACTURERS

    Mr. Knott. Good afternoon, Mr. Chairman and Members. I am 
very pleased to appear before this Subcommittee on behalf of 
the National Association of Manufacturers, commonly called NAM. 
The NAM is the nation's largest and oldest multi-industry trade 
association. NAM represents 14,000 members, including 10,000 
small and mid-sized companies and 350 member associations 
serving manufacturers and employees in every industrial sector 
of all 50 States.
    My name is James M. Knott, Sr., and I have been in business 
since 1942, when as a 12-year-old I put my first lobster traps 
into the Atlantic Ocean. Along the way I came up with a plastic 
coated wire mesh lobster trap far superior to the traditional 
wooden traps, and this same mesh also rings many American 
prisons and protected Kuwait's border with Iraq, and the U.S. 
Government took it down recently because it is no longer 
needed. But there will be some other business I am sure.
    Through all my hard work and success I remained loyal to 
the business routes in the lobster business as I still fish for 
lobsters as a Commonwealth of Massachusetts licensed commercial 
fishermen. In addition to serving as the Director of NAM, I 
have been appointed as a volunteer Small Business 
Administration Regulatory Fairness Board member with the SBA 
Office of the Ombudsman. I am dedicated to making sure that 
America's small businessmen and women are treated fairly in the 
regulatory enforcement process.
    My first encounter with OSHA occurred when a young OSHA 
inspector tried to conduct an inspection but only succeeded in 
demonstrating his ignorance of OSHA regulations. His final 
report contained about 15 noncompliances, all of which were 
eventually proved untrue. This didn't occur until I filed an 
appeal, went to the OSHA offices in Boston, met with an OSHA 
lawyer and presented my arguments. The inspector simply didn't 
know or understand what he was supposed to do. Eventually his 
ignorance wasted a whole lot of time and money for me and for 
all of us who pay his salary.
    An interesting sidelight to this first encounter was my 
plant engineer's story about the inspector. While the 
inspection was going on he said I know that guy. He used to 
work at a bakery where I was a plant engineer before they went 
out of business. He was on the production line bagging buns.
    Our company has received numerous safety awards, including 
the statewide group winner of the Massachusetts Safety Council, 
and from the National Safety Council's Central Mass chapter. We 
have received those three times in three different years.
    I have also participated in a voluntary inspection program 
with the Commonwealth of Massachusetts Department of Labor that 
would eliminate the need for us to have an OSHA inspection for 
1 year. This evidence was presented to an OSHA inspector as he 
arrived at our facility during that 1 year timeframe. The 
leader of the group said they don't know what they are doing. 
We are going to do a wall to wall inspection today. I knew I 
could tell the inspectors to leave the premises and get a 
warrant if they wanted to, but I decided to cooperate and let 
them do a wall to wall inspection. During the inspection, much 
of which I attended, they made a number of outlandish comments 
and clearly demonstrated their lack of knowledge. The most 
interesting of all involved a hole in Riverdale Street, a 
street that I own that is on top of the Riverdale Dam, a dam 
that created the Riverdale Mill Pond in 1753 from the waters of 
the Blackstone River, waters I use to generate electricity with 
a 1901 hydro power turbine I restored in 1984. The hole was 
created by a flood that had washed some fill out from under the 
street. The hole was less than 6 feet deep, and we filled it 
with 13 cubic yards of self leveling concrete later in the day. 
That is about the size of a full sized station wagon. When the 
OSHA inspector arrived on the scene he saw that one of my plant 
maintenance men with whom I have worked with more than 40 years 
had lowered a ladder into the hole, had climbed down it a rung 
above the bottom to measure the hole so he would be able to 
determine how much self leveling concrete to order. One wall of 
the hole was a poured concrete sluice way that conveyed water 
under the street and into the hydro power pit. The other wall 
was a hole and the other wall was the dirt at its natural angle 
of repose. As my maintenance man was climbing back the OSHA 
inspector said get out of that trench, you are violating our 
trench regulation. My mature and experienced maintenance man 
attempted to explain to the inspector what he was doing, that 
the hole was not a trench. OSHA inspector told my man he didn't 
want to hear any excuses.
    A few weeks later I received an OSHA document that said 
among many other things I had endangered a man's life by 
violating the OSHA trenching regulation. I have read the OSHA 
manuals from cover to cover on several occasions, and I found 
that the inspector was as ignorant as I had suspected. He 
didn't know the OSHA definition of what a trench is. An OSHA 
regulated trench is five or more feet deep. The hole was less 
than five feet deep and trenches certainly don't have one 
poured concrete wall and the other dirt at its natural angle of 
repose.
    The total fine as a result of the inspection was $4,500. I 
called OSHA and they said appealing this thing is going to cost 
you a lot of time and money. I can cut the fine in half if you 
would like to settle the matter. I said the fine isn't the 
problem. The problem is that OSHA has created a public document 
that says I endangered a man's life. The inspector does not 
know the regulations. The next communication was from a U.S. 
attorney in the Boston office. He went on to say I know OSHA 
offered to cut the fine in half. I can cut it in half again if 
you want to settle the matter. I said I want to get that 
inspector up on a witness stand and have my lawyer demonstrate 
to the judge that he doesn't know the OSHA regulations. The 
attorney said I will see you in court.
    I called my lawyer, who knows much more about the protocol 
of the legal system than I do and I told him to begin a 
discovery process. A few days after the motion was filed, my 
attorney received a notice from the court and it said the joint 
motion to dismiss has been granted. When he called me with the 
news, I was furious and told him I wanted to get that inspector 
on the witness stand to expose him. My lawyer, with whom I have 
worked more than 40 years, said so would I, but there is 
nothing we can do because the judge has dismissed the case.
    More seriously was a time when an OSHA inspector was 
accompanied by two armed Federal marshals. I had previously 
refused this same inspector entry to my factory without a 
warrant because I had just passed an OSHA inspection mere 
months before. The inspector was simply there to harass me 
because I hadn't bent to OSHA's will. He put together a series 
of nonsensical complaints for which the fine was $8,400. I went 
through my now standard operating procedure, but this time 
there was no cut the fine in half shakedown offers if I just 
wouldn't contest OSHA's preposterous ruling, I turned the case 
over to my attorney and waited for my day in court. Five days 
later, before the day in court, my lawyer called me on his 
conference room phone and introduced me to the attorney who was 
going to prosecute the case. The attorney said, Mr. Knott, I 
have read your appeal and I am willing to eliminate three of 
the seven complaints but we have got you on four and I would 
like to know if you are willing to pay the fine so we don't 
have to go to court. I said I want to go to court. But let me 
tell you what I am going to tell the judge about each of the 
ridiculous and fallacious complaints. He said, OK, let's start 
with the working platform that doesn't have a guardrail. I said 
the platform is not a working platform. It is a storage rack. 
And there is no way it could be used with a guardrail. If I had 
a guardrail someone would have to go up on the rack, remove the 
guardrail every time something was put on a rack and that would 
be a greater hazard than there is now. The Assistant U.S. 
Attorney said we will eliminate that. Let's go on to the next. 
The remaining three were as ridiculous and fallacious as the 
guardrail. I presented my arguments.
    Chairman Norwood. Mr. Knott, you are considerably over the 
5 minutes. I am thoroughly enjoying your testimony. Would you 
like it wrap up?
    Mr. Knott. Let's see. My problem with H.R. 2731 is the same 
as the one beside me, that the numbers are too small. I think 
the SBA definition of a small business should be 500 employees 
and I think the net worth is too small. We are an asset rich 
country, which is one of the reasons why I am able to compete 
with China because we have high speed equipment that permits us 
to compete.
    Chairman Norwood. Sir, do we all do have your written 
testimony?
    Mr. Knott. Yes, thank you.
    Chairman Norwood. And everyone here will look at it.
    [The prepared statement of Mr. Knott follows:]

Statement of James Knott, Riverdale Mills, Northbridge, Massachusetts, 
         on behalf of the National Association of Manufacturers

    Good afternoon, Mr. Chairman and members.
    I am pleased to appear before this subcommittee on behalf of the 
National Association of Manufacturers (NAM). The NAM is the nation's 
largest and oldest multi-industry trade association. The NAM represents 
14,000 members, including 10,000 small and mid-sized companies and 350 
member associations serving manufacturers and employees in every 
industrial sector and all fifty states.
    My name is James M. Knott, Sr. I have been in business since 1942 
when, as a 12-year old, I put my first lobster traps into the Atlantic 
Ocean. Along the way I came up with a plastic-coated, wire mesh lobster 
trap far superior to traditional wooden traps. This same mesh also 
rings many American prisons and protects Kuwait's border with Iraq. 
Through all my hard work and success, I have remained loyal to my 
business roots in the lobster business as I still fish for lobsters as 
a Commonwealth of Massachusetts Licensed Commercial Lobsterman.
    Unfortunately all my business experiences haven't been as pleasant. 
My first encounter with OSHA occurred when a young OSHA inspector 
imperiously tried to conduct an inspection but only succeeded in 
demonstrating his ignorance of OSHA regulations. His final report 
contained about fifteen non-compliances--all of which were eventually 
proved untrue. This didn't occur until I filed an appeal, went to the 
OSHA offices in Boston, met with an OSHA lawyer and presented my 
arguments.
    The inspector simply didn't know or understand what he was supposed 
to do. Eventually, his ignorance wasted a whole lot of time and money.
    An interesting sidelight to this first encounter was my plant 
engineer's story about the inspector. While the inspection was going 
on, he said, ``I know that guy. He used to work at a bakery where I was 
plant engineer before they went out of business. He was on the 
production line bagging buns.''
    Our company has received numerous safety awards including the 
statewide group winner of the Massachusetts Safety Council and from the 
National Safety Council's Central Mass. Chapter. I have also 
participated in a voluntary inspection program with the Commonwealth of 
Massachusetts' Department of Labor and that would eliminate the need 
for us to have an OSHA inspection for one year.
    This evidence was presented to an OSHA inspector as he arrived at 
our facility during that one year time frame. The leader of the group 
said, ``They don't know what they're doing; we're going to do a wall-
to-wall inspection today.''
    I knew I could tell the inspectors to leave the premises, and get a 
warrant, if they wanted, but I decided to cooperate and let them do a 
wall-to-wall inspection.
    During the inspection, much of which I attended, they made a number 
of outlandish comments and clearly demonstrated their lack of 
knowledge.
    The most interesting of all involved a hole in Riverdale Street, a 
street that I own, that is on top of the Riverdale dam, a dam that 
created the Riverdale millpond in the 1700's, from the waters of the 
Blackstone River; waters I use to generate electricity with a 1901 
hydropower turbine I restored in 1984.
    The hole was created by a flood that had washed some fill out from 
under the street; the hole was less than six feet deep and we filled it 
with 13 cubic yards of self-leveling concrete, later in the day 
(thirteen yards is about the volume of a full-sized station wagon).
    When the OSHA inspector arrived on the scene he saw that one of my 
plant maintenance men, with whom I have worked for more than forty 
years, had lowered a ladder into the hole and had climbed down to a 
rung above the bottom, to measure the hole, so he would know how much 
self-leveling concrete to order.
    One wall of the hole was a poured concrete sluiceway that conveyed 
water under the street and into a hydropower-turbine pit; the other 
wall of the hole was dirt at its natural angle of repose.
    As my maintenance man was climbing back up the ladder, the OSHA 
inspector said, ``get out of that trench, you are violating our 
trenching regulation!''
    My mature and experienced maintenance man attempted to explain to 
the inspector what he was doing, and that the hole was not a trench.
    The OSHA inspector told my man that he didn't want to hear any 
excuses, the hole was a trench.
    A few weeks later I received an OSHA document that said, among many 
other things, that I had endangered a man's life by violating the OSHA 
trenching regulation.
    I have read OSHA manuals from cover to cover, on several occasions 
and found that the OSHA inspector was as ignorant as I had suspected. 
He didn't know the OSHA definition of what a trench is: an OSHA-
regulated trench is five or more feet deep, the hole was less than 
five-feet deep and trenches certainly don't have one poured concrete 
wall and another wall of dirt, at its natural angle of repose.
    The total fine, as a result of the inspection, was $4,500.00.
    I called OSHA and they said, ``Appealing this thing is going to 
cost you a lot of time and money, I can cut the fine in half if you'd 
like to settle the matter.''
    I said, ``The fine isn't the problem. The problem is that OSHA has 
created a public document that says I endangered a man's life; the 
inspector doesn't know the regulations.''
    The next communication was from a U.S. attorney in the Boston 
office of the Justice Department.
    He went on to say, ``I know OSHA offered to cut the fine in half, 
but I can cut the fine in half again if you want to settle the 
matter.''
    I said, ``I want to get that inspector up on the witness stand and 
have my lawyer demonstrate to the judge that he does not know the 
regulations.''
    The attorney said, ``I'll see you in court.''
    I called my lawyer, who knows much more about the protocol of the 
legal system than I, and told him to begin a discovery proceeding with 
interrogatories and the production of, notes, photographs, videos and 
documents related to the case.
    A few days after the motion was filed, my attorney received a 
notice from the court that said, ``the joint motion to dismiss the case 
had been granted.''
    When he called me with the news, I was furious! I told him I wanted 
him to get the inspector on the witness stand to expose him.
    My lawyer, with whom I have worked for more than forty years said, 
``so would I, but there's nothing we can do because the judge has 
dismissed the case.''
    More seriously was the time an OSHA inspector was accompanied by 
two armed federal marshals. I had previously refused this same 
inspector entry to my factory without a warrant because I had just 
passed an OSHA inspection mere months before. This inspector was simply 
there to harass me because I hadn't bent to OSHA's will.
    He put together a series of nonsensical complaints for which the 
fine was $8,400.
    I went through my now-standard operating procedure, and appealed 
the case.
    This time, there were no ``cut-the-fine-in-half'' shakedown offers 
if I just wouldn't contest OSHA's preposterous ruling. I turned the 
case over to my attorney and waited for my day in court.
    Five days before the day in court, my lawyer called me on his 
conference phone and introduced me to the attorney who was going to 
prosecute the case.
    The attorney said, ``Mr. Knott, I've read your appeal and I'm 
willing to eliminate three of the seven complaints, but we've got you 
on four and I'd like to know if you're willing to pay the fines so we 
don't have to go to court.''
    I said, ``I want to go to court, but let me tell you what I'm going 
to tell the judge about each of the ridiculous and fallacious 
complaints.'' He said, ``Okay, let's start with the working platform 
that doesn't have a guardrail.''
    I said, ``The platform is not a working platform, it is a storage 
rack and there's no way it could be used with a guard-rail.''
    If it had a guardrail someone would have to go up on the rack and 
remove the guardrail every time something was put on or taken off. That 
would create a much greater hazard than there is now.
    The Assistant U.S. Attorney (AUSA) said, ``We'll eliminate that 
one, let's go on to the next.''
    The remaining three were as ridiculous and fallacious as the 
storage-rack guardrail.
    I presented my arguments and the AUSA agreed to eliminate each one. 
My attorney and the AUSA shut off the conference phone and held a 
private conference. A few minutes later, my attorney got back on the 
phone and said, ``The attorney is willing to dismiss the case if we 
will agree not to seek damages for this time-consuming event.''
    I said, ``I'm so busy for the next few weeks that I need to close 
this case despite the fact that I would like the opportunity to expose 
these inspectors for what they do.'' The case was closed by exchanging 
paperwork.
    All of the above is thoroughly documented. I go into much greater 
detail in my personal written statement.
    My experience with OSHA shows how its inspectors can get totally 
out of control, and H.R. 2731 is a step in the right direction. The one 
exception I take with the bill is the size requirement for small 
business being set way too low for those that would be able to get 
their attorneys' fees back if they prevailed. This section of the bill 
needs to be changed to reflect a true small business definition. I 
along with the NAM believe that a better definition would be the SBA 
definition. The most common size standards are 500 employees for most 
manufacturing and mining industries.
    Please also reconsider these small net worth figures you have set 
in the bill. In today's modern manufacturing world we are very asset 
rich in machinery and equipment but this surely does not make us a so-
called big business.
    Thank you Mr. Chairman and committee members for your time and 
attention to this matter. I would be happy to answer to any questions 
you may have for me.
                                 ______
                                 
    Chairman Norwood. Mr. Nelson, you are now recognized for 5 
minutes or so.

  STATEMENT OF SCOTT NELSON, PUBLIC CITIZEN LITIGATION GROUP, 
                        WASHINGTON, D.C.

    Mr. Nelson. Good afternoon, Mr. Chairman and Members of the 
Subcommittee. Thank you for inviting me here today. Since my 
testimony is set forth in writing I will just summarize the 
points that are made there in.
    I would like to start by explaining one thing that is not 
explained in my testimony. My organization Public Citizen is a 
frequent litigant with the Federal Government of the United 
States and in that capacity we have considerable experience 
with the Equal Access to Justice Act, which generally governs 
our entitlement to attorney fees if we prevail, just as under 
current law it governs the entitlement of an OSHA enforcement 
action target if that person prevails in litigation before the 
agency or in court. The Equal Access to Justice Act generally 
provides--.
    Chairman Norwood. Pull that mike up. There you go. Turn 
that baby on.
    Mr. Nelson. Thank you, Mr. Chairman. The Equal Access to 
Justice Act generally provides--by the way I will say people 
don't usually ask me to talk louder so I appreciate it. The Act 
generally provides that litigants before Federal agencies or in 
the courts get fees if the agency's position was not 
substantially justified. That provision applies in a broad 
variety of enforcement actions and in actions where citizens 
are forced to bring suit against the government in order to 
obtain its compliance with the law. It reflects--and I am not 
here to present the Federal Government's interest in that 
substantial justification standard, but it apparently reflects 
Congress' judgment that for the run of cases the no substantial 
justification standard is appropriate for determining whether 
or not a prevailing party should obtain fees. That may be right 
or wrong, but the issue posed by this legislation is whether a 
special exception should be created for OSHA enforcement 
actions. It seems to me that turns on whether there is some 
need to chill OSHA enforcement beyond what the no substantial 
justification standard already does, whether there is a problem 
with OSHA enforcement that justifies the conclusion that OSHA 
as compared to other Federal agencies should be singled out for 
a special standard to discourage its enforcement actions.
    Now, the law already would provide that if an OSHA action 
is frivolous, if it lacks a substantial justification, as some 
of the instances that we have heard discussed today would 
suggest may happen from time to time, that someone who prevails 
against OSHA can already get fees. The question is, is OSHA so 
out of control that a special law is needed to tighten the 
standard? I think that while no one who litigates with the 
Federal Government would deny that Federal agencies, including 
OSHA, sometimes act unreasonably, that the evidence that OSHA 
singularly deserves to have this special standard is lacking.
    OSHA's overall enforcement effort, by the account of the 
leaders of this Administration, needs to be stepped up, not cut 
back. Its enforcement effort on the whole is relatively modest. 
There are a fairly small number of contested cases each year. 
Very few of them go to hearing. And in even fewer is there a 
determination that OSHA has failed to carry its burden or has 
behaved unreasonably. In addition, OSHA's penalties are 
relatively modest. The typical violation involves a penalty, a 
serious violation involves a penalty of about $900 and OSHA's 
procedures are designed to accommodate small businesses.
    In our view, while it can certainly be said that OSHA, like 
every other Federal agency, sometimes oversteps its bounds, the 
case for sending a message that OSHA enforcement activities as 
compared to those of other Federal agencies need to be singled 
out, to be discouraged through this type of legislation has not 
been met.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Nelson follows:]

Statement of Scott Nelson, Public Citizen Litigation Group, Washington, 
                                   DC

    Good afternoon, Mr. Chairman and members of the Subcommittee, and 
thank you for inviting me to testify before you this afternoon. The 
subject of my testimony is H.R. 2731, titled the ``Occupational Safety 
and Health Small Employer Access to Justice Act of 2003.'' H.R. 2731 
would provide that certain small employers who prevailed in OSHA 
enforcement actions at the administrative level or in the courts would 
be entitled to receive attorneys' fees even if OSHA could show that its 
position was ``substantially justified,'' which would otherwise 
preclude an award of attorneys' fees under the ordinary standards of 
the Equal Access to Justice Act (EAJA). For the reasons that follow, 
the creation of a special exception to the EAJA's no-substantial-
justification requirement applicable solely to OSHA enforcement actions 
is not warranted.
    The EAJA is the basic attorney fee-shifting statute applicable to 
litigation and adversary administrative proceedings involving the 
federal government. In general, it provides that individuals (except 
the very wealthy), small businesses, certain nonprofit organizations, 
and charitable organizations can recover attorneys' fees when they 
prevail in litigation against the federal government and the federal 
government cannot show that its position was substantially justified.
    The no-substantial-justification requirement is applicable in a 
wide variety of situations in which people of limited means are forced 
to litigate their rights against our powerful government. The great 
majority of EAJA cases involve Social Security claimants--obviously not 
persons of substantial means--who, even when they prevail against the 
federal government and succeed in obtaining benefits to which they are 
entitled, must face the additional burden of litigating over whether 
the government's position was substantially justified before they may 
obtain attorneys' fees. The same is true of individual litigants in 
veterans' benefits cases, and a similar rule applies to parties who 
prevail against the United States in cases involving income taxes.
    Similarly, persons or organizations who prevail in litigation 
establishing that an agency such as OSHA has failed to carry out a 
statutory mandate (such as the issuance of standards for protection of 
workers) are also not entitled to an award under the EAJA if the 
government's position was substantially justified. For example, my 
organization, Public Citizen, recently prevailed in litigation 
establishing that OSHA's decade-long delay in taking action to protect 
workers against the risks posed by hexavalent chromium was unreasonable 
and violated the Administrative Procedure Act. As difficult as it is to 
prevail in such litigation, establishing an entitlement to attorneys' 
fees would have required us to litigate over whether the agency's 
actions were ``substantially justified,'' a task we decided not to 
attempt to undertake.
    The ability of persons and organizations to obtain fees under EAJA 
has recently been even further limited by the federal courts' 
application to EAJA of the Supreme Court's decision in Buckhannon Board 
and Care Home, Inc. v. West Virginia Dept. of Health and Human 
Resources, 532 U.S. 598 (2001). Buckhannon held that a fee award 
claimant whose litigation was a catalyst in bringing about the result 
desired (for example, through a settlement) but who did not obtain a 
court order formally granting relief was not a ``prevailing party.'' 
The application of Buckhannon to EAJA cases has further limited the 
ability of persons who litigate against the federal government to 
obtain fees for their efforts, even when those efforts succeed.
    H.R. 2731 would single out one class of litigants (small 
businesses) in one category of cases (OSHA enforcement proceedings) and 
relieve them of the burden of alleging that the agency's position was 
``not substantially justified'' when they seek attorneys' fees. These 
litigants are no more deserving of consideration, no more lacking in 
resources, no more put upon by the government, and no more at a 
disadvantage in relation to the government's litigation resources, than 
the many other litigants in other types of cases who would remain 
subject to the no-substantial-justification requirement when they 
sought attorneys' fees. Singling out these litigants for special 
treatment that is denied to, for example, Social Security disability 
claimants and disabled veterans, is unfair and unjustified.
    Moreover, if new exceptions were to be created, OSHA enforcement 
proceedings would not be the place to start. There is insufficient 
reason to believe that these proceedings present a special problem that 
needs to be addressed, and there is a significant likelihood that this 
legislation would further weaken OSHA enforcement efforts to the 
detriment of American workers.
    To begin with, there is little reason to think that OSHA 
overenforces worker safety and health regulations against either small 
or large businesses. As both Secretary of Labor Chao and OSHA 
Administrator Henshaw have emphasized in their public statements, 
American workers continue to suffer occupational injuries and diseases 
from causes that OSHA's standards are designed to prevent. Even under 
its current leadership, which can hardly be described as hostile or 
unsympathetic to the needs of business, OSHA has stressed a need for 
increased enforcement (especially directed at serious violations and 
repeat violators), not weaker enforcement efforts.
    The numbers also help tell the story. According to the annual 
appropriations requests of the Occupational Safety and Health Review 
Commission (OSHRC), over the last several fiscal years OSHA's workplace 
inspections (which have ranged between about 34,000 and 38,000 
annually) have generated about 2,100-2,400 new contested case filings 
with the OSHRC each year. Of those cases, the great majority settled, 
and only 95 to 156 actually were disposed of after a hearing by an ALJ. 
Even fewer, ranging from 15 to 37, were subject to review proceedings 
before the Commission itself and disposed of on the merits; and only a 
handful ever reached the courts. 1
---------------------------------------------------------------------------
    \1\ These figures are taken from OSHRC's fiscal year 2004 budget 
request, which is available at http://www.oshrc.gov/budget/
cong20041c.html.
---------------------------------------------------------------------------
    Moreover, these cases for the most part do not involve onerous 
penalties. In only about 200 cases a year does the agency even seek 
penalties that would exceed $50,000. 2 OSHA's figures show 
that even for what it considers ``serious'' violations, its average 
penalty in fiscal year 2002 was $977, and in fiscal year 2001, the 
average was $930. 3 Moreover, the adjudicatory proceedings 
used in OSHA enforcement actions are calibrated to accommodate the 
needs of small employers in simple cases: Approximately 1/3 of the new 
cases filed before OSHRC are assigned to its ``E-Z'' trial track, which 
is designed to help minimize expenses. 4 Moreover, OSHA has 
instituted outreach programs specifically designed to assist small 
businesses with compliance, and OSHA's standard-setting process is 
required by statute to ensure that the needs of small businesses 
receive special consideration when OSHA establishes the rules that 
businesses must live by.
---------------------------------------------------------------------------
    \2\ This data also comes from OSHRC's fiscal year 2004 budget 
request.
    \3\ This figure is taken from OSHA's website, http://www.osha.gov/
pls/oshaweb/owadisp.show--document?p--table=NEWS--RELEASES&p--id=9863.
    \4\ This figure, again, comes from OSHRC's fiscal year 2004 budget 
request.
---------------------------------------------------------------------------
    The picture, overall, is hardly one of an agency that is out of 
control. The number of OSHA enforcement actions that actually involve 
contested adjudications is fairly small, the penalties are generally 
modest, and the substantive and procedural standards are already 
supposed to accommodate the interests of small-business litigants. The 
number of cases in which the agency actually brings an unwarranted 
enforcement action (let alone one that is without ``substantial 
justification'') is undoubtedly small. Most cases settle, which is 
probably desirable, and though that would likely continue to be the 
case regardless of the passage of this legislation, the legislation 
might undesirably tip the scales in ways that would make settlements 
more favorable to employers and less beneficial to the workers OSHA is 
supposed to protect.
    This is not to say that instances of unfairness cannot be found in 
the annals of OSHA enforcement. The same is true, however, in many 
other agencies. The question is whether there is a special need for a 
different rule for OSHA, and the answer, I submit, is no. Moreover, the 
creation of a special rule in this context could carry with it 
substantial costs. Enforcement actions against very small businesses 
will in the majority of cases be aimed at redressing and deterring 
dangerous conditions by recovering modest financial penalties. If 
enforcement personnel fear that failure to win even a case that is 
demonstrably substantially justified may result in an award of fees 
against the agency that would significantly exceed the expected 
penalty, they will likely be overdeterred from bringing meritorious 
proceedings against businesses who fall within the scope of the 
legislation. The result may be a skewed set of enforcement priorities 
and a risk of injury, illness, or even death to workers. Given that, 
even according to OSHA, too many workers continue to be subject to 
workplace injuries and diseases (indeed, OSHA Administrator Henshaw 
recently stated that 16 workers a day still die in this country from 
occupational causes 5), the balance should be struck in 
favor of protecting workers, not inhibiting enforcement. As OSHA 
continues to remind us, we need more enforcement of workplace safety 
standards, not less.
---------------------------------------------------------------------------
    \5\ http://www.osha.gov/pls/oshaweb/owadisp.show--document?p--
table=NEWS--RELEASES&p--id=10188
---------------------------------------------------------------------------
    Thank you.
                                 ______
                                 
    Chairman Norwood. Thank you, Mr. Nelson. And just so you 
know, I would be happy to have this same provision in the law 
for every Federal agency. I think it would be very appropriate. 
But I have jurisdiction over OSHA. So that is why we are 
talking about OSHA today and not all the other Federal agencies 
that I wish other Chairmen would do the same thing for.
    Ms. Drummond, you are now recognized for 5 minutes or so.

  STATEMENT OF ANITA DRUMMOND, DIRECTOR, LEGAL AND REGULATORY 
   AFFAIRS, ASSOCIATED BUILDERS AND CONTRACTORS, ARLINGTON, 
                            VIRGINIA

    Ms. Drummond. Good afternoon. Chairman Norwood and Members 
of the Subcommittee, my name is Anita Drummond. I am Director 
of Legal and Regulatory Affairs for Associated Builders and 
Contractors. I would like to thank the Subcommittee for holding 
this hearing today on the Occupational Safety and Health Small 
Employer Access to Justice Act of 2003. This issue is of 
significant interest to ABC members not just under the OSHA 
regulations but all Federal legislation. Our members are 
frequently faced with the tremendous cost of defending 
citations, and I will be summarizing my comments in order to 
appreciate the time of the Subcommittee.
    ABC is a national trade association of 23,000 contractors, 
primarily very small contractors of all various specialties. 
There is a vast disparity in resources between small business 
owners and Federal agencies. Because of these inequalities in 
the litigation environment small businesses and individuals are 
often forced to choose between settling with the government to 
avoid litigation costs regardless of the merits of their case. 
To address this concern, the Equal Access to Justice Act, EAJA, 
was passed to level the playing field, particularly for small 
businesses, and to encourage the Federal Government to ensure 
that the claims that they are pursuing are worthy of this 
effort.
    Under current law an employer may only recover attorney's 
fees and costs, as Mr. Nelson indicated, under the 
substantially justified standard. This does not require that 
the government show a substantial likelihood of success in 
prevailing. In fact the courts have been very mixed in their 
determination of what the standard means. The Supreme Court 
simply says that it is a reasonable basis in law and fact. And 
you have very mixed court decisions on what exactly that means.
    In the OSHA environment there are many technical and 
complex regulations and they are subjected to tremendous 
interpretation. And I will discuss specifically the general 
duty clause which has been referenced by the witnesses. The 
ambiguities are rampant under the standard. And, in fact, when 
there are environments where a Federal agency may have mixed 
interpretations there have been courts to determine it didn't 
matter if there were mixed interpretations, that the defense 
that a small business posed was not sufficient to get 
prevailing wages under EAJA. This wasn't OSHA in this case. It 
was a Coast Guard case. The Coast Guard had mixed 
interpretations of its own standard but a small business 
couldn't rely on those ambiguities to prove that the agency 
wasn't substantially justified. The standard simply didn't work 
in any kind of predictable manner, which is exactly what a good 
legal system does. It has predictability and you can make good 
decisions.
    In the OSHA environment there is a 90 percent settlement 
rate. Well, the reason there is a 90 percent settlement rate is 
because of the issues that have been discussed. When the agency 
continually says, well, we will settle, we will cut your fees; 
it is easier for small business. It can easily cost $20,000 to 
litigate a defense on a citation that is for $8,400? The math 
is pretty simple. However, it has other implications for public 
policy. And these are the issues that obviously the 
Subcommittee has to deal with for public policy discussion. If 
a small business is cited and settles, that citation does go on 
the public record. And the way that plays out, and I will use 
the example of a public procurement system. A public 
procurement system that looks into a small business' record to 
determine if they can play ball and we use the Federal 
Government, can small businesses have a larger share of the 
Federal procurement pie, can they play ball, if a contracting 
officer determines that they don't comply, that they have too 
many citations, they are not going to let them have a shot 
under an RFP situation. There is legislation that has been 
introduced by Members of the House that would require the 
Federal Government to maintain a data base of all the citations 
that businesses have and that the contracting officer would 
rely on. That is the kind of implications that are in play, and 
I know this is outside the purview of this Subcommittee. But 
the concept is that the system isn't accurately reflecting who 
may or may not be the bad players, and second, it is not giving 
those small players an opportunity to defend themselves.
    I want to address specifically the worker safety issue. ABC 
is critically committed to worker safety, and we would like to 
see the OSHA's resources focus on--and let's use the 
construction industry specifically--on fatalities and major 
industries. And when you look at some of the citations--there 
are many of them for the small things--but not for worker 
fatalities and injuries for electrocution, falls, the terrible 
problem we have with trucks backing up on people. Those are 
where the problems are, and we would actually support major 
enforcement efforts for the serious violations.
    And what I am trying to say is if you enact this 
legislation, it does not necessarily kill OSHA, but it should 
allow them to shift resources to enforcement on the very 
serious areas of worker safety. And I don't want to discount 
that, because for construction--which happens to be an 
inherently dangerous industry in many ways--we would support 
efforts that would assure the agency's efforts are being 
supported.
    I know that is a little off of my written testimony, but I 
thought it was important to address in the context of safety, 
which is critically important to this Subcommittee.
    Thank you and I welcome your questions.
    [The prepared statement of Ms. Drummond follows:]

     Statement of Anita Drummond, Senior Director, Legislative and 
  Regulatory Affairs, Associated Builders and Contractors, Arlington, 
                                Virginia

INTRODUCTION
    Good morning, Mr. Chairman and members of the Subcommittee on 
Workforce Protections. My name is Anita Drummond and I am the Director 
of Legal and Regulatory Affairs for the Associated Builders and 
Contractors (ABC). I would like to thank Chairman Norwood and the 
members of the subcommittee for the opportunity to address this 
important piece of legislation, The Occupational Safety and Health 
Small Employer Access to Justice Act of 2003 (H.R. 2731). This issue is 
of great significance to the members of ABC, that frequently are faced 
with the tremendous costs associated with regulatory compliance and 
costs associated with defending unproven citations. I will be 
summarizing my comments, but I would request that my full statement be 
submitted for the official record.
    ABC is a national trade association representing more than 23,000 
merit shop contractors, subcontractors, material suppliers and 
construction-related firms in 80 chapters across the United States. 
ABC's membership represents all specialties within the U.S. 
construction industry and is comprised primarily of firms that perform 
work in the industrial and commercial sectors of the industry.
    ABC's diverse membership is bound by a shared commitment to the 
merit shop philosophy within the construction industry. This philosophy 
is based on the principles of full and open competition unfettered by 
the government, and nondiscrimination based on labor affiliation and 
the awarding of construction contracts to the lowest responsible 
bidder, through open and competitive bidding. This process assures that 
taxpayers and consumers will receive the most for their construction 
dollar.
    According to the U.S. Census Bureau, in 2000, there were 701,947 
construction firms in the United States. Of those firms, nearly all 
employ fewer than 20 employees and would likely benefit to some degree 
from the types of reform offered in H.R. 2731.

THE EQUAL ACCESS TO JUSTICE ACT (EAJA)
    The size of the federal government and the complexity of many of 
our nation's laws and regulations are intimidating - especially to the 
small business community. There is a vast disparity in resources and 
expertise between small business owners and the federal agencies. 
Because of this inequality, small businesses and individuals often are 
forced to choose between settling with the federal government to avoid 
costly litigation, regardless of the merits of the case, or defending 
themselves and facing the exorbitant legal fees. This situation stands 
directly contrary to the original intent of the Equal Access to Justice 
Act (EAJA), which was to level the playing field for small businesses 
and encourage the federal government to ensure that the claims it 
pursues were worthy of its efforts.
    Under current law, an employer may only recover attorney's fees and 
costs incurred in defending an OSHA citation under EAJA--which permits 
small businesses to recover fees in certain circumstances, as employers 
are at a great disadvantage against agencies with vast resources. 
However, EAJA only allows recovery by small businesses if OSHA fails to 
show that it was ``substantially justified'' for issuing the citation.
    Additionally, the OSH Act's many technical and complex requirements 
have made it fairly simple for OSHA to develop creative arguments to 
justify their actions. As a result, EAJA has proven to be less 
effective in cases dealing with OSHA. In order to fulfill the true 
intent of EAJA, a small entity (business owners and individuals) that 
prevails in court against OSHA should be able to recoup their costs and 
attorney fees.
    Fortunately, H.R. 2731 allows small employers to recover costs and 
attorney's fees if the employer successfully defends itself against an 
OSHA citation--regardless of whether OSHA can show justification for 
the citation.

LEGISLATIVE RECOMMENDATIONS
    ABC and its member companies are dedicated to safety for all 
workers. Significantly, ABC is a partner for safety with OSHA. This 
program tracks companies' injury and illness rate and loss workday 
rates and identifies problems in development before a problem becomes 
more serious. Serious injuries and fatalities are ABC's primary 
concern. ABC offers numerous safety and health training programs at its 
80 chapters. For instance, we recently launched a crane operator 
education and certification program because crane accidents have such 
severe risks. Additionally, the ABC National Safety Committee created 
the Safety, Training and Evaluation Process, or STEP, in 1990. STEP, an 
OSHA recognized program, is an objective, self-evaluation tool that is 
used by construction contractors to assess their safety policies and 
procedures.
    Chairman Norwood's proposed legislation represents a small step 
towards assisting the good actors - and the very smallest companies - 
that maintain a safe workplace. ABC strongly supports the intention of 
this legislation to level the playing field between an agency and the 
very smallest of companies when a citation is made. The mechanism--a 
prevailing party awards of costs and fees - proposed in H.R. 2731 is 
commonly adopted by federal, state, and local governments to address 
inequities in prosecution of statutes between the parties.
    A provision that grants costs and attorney's fees to the prevailing 
party is not intended to act as a tool to punish or restrict the 
actions of a plaintiff. Rather, prevailing party provisions allow 
defendants to more wisely use their resources without assumed losses, 
regardless of the merits of their case. Under the current EAJA system, 
winners lose in terms of money and the reputation of their company. 
Without a prevailing wage provision, small businesses simply cannot 
afford to fight, regardless of the likelihood of success, unless they 
have significant resources to match the government's legal resources.
    ABC strongly supports H.R. 2731, but recommends it is amended to 
include a provision that assures awards for costs and attorney's fees 
are reimbursed directly out of OSHA's budget. Without this link between 
enforcement and litigation, behavioral change is unlikely. Currently, 
such awards under EAJA are not paid by the enforcing agency.

CURRENT UTILIZATION OF EAJA
    The initial cost estimate of EAJA, issued by the Congressional 
Budget Office (CBO) prior to the act's original enactment, estimated 
that the total awards for all judicial proceedings would be 
``approximately $67.7 million in fiscal year 1982, $77.6 million in 
fiscal year 1983, and $90 million in fiscal year 1984.'' For 
administrative adjudication, the awards were estimated to be ``$19.4 
million in fiscal year 1982, increasing to $21.3 million and $22.4 
million in fiscal years 1983 and 1984, respectively.'' However, the 
General Accounting Office (GAO) issued a report in 1998, analyzing EAJA 
data from fiscal year 1982 to fiscal year 1994. The report found that 
over the twelve-year span, only 1,593 applications were filed with 
federal agencies, of which 604 resulted in an award of fees totaling 
approximately $4.5 million, an average of approximately $7,500 per 
claim.
    According to a document released by the Small Business 
Administration, ``during that same time period, only 6,773 applications 
were filed in federal court, and 5,642 resulted in awards of fees 
totaling $29.6 million, an average of approximately $5,200 per claim.'' 
GAO also found that ``claims against the Department of Health and Human 
Services accounted for about 85 percent of all applications submitted, 
about 92 percent of applications granted, and about 56 percent of the 
amounts paid.''
    The results of the GAO study suggest that EAJA has failed to 
achieve its objectives. The combined twelve-year total of $34.1 million 
in fees awarded barely reached one-third of CBO's estimates for even 
the first year of EAJA's enactment alone. Furthermore, the study 
confirms the conclusion reached by researchers (Professors Susan Gluck 
Mezey and Susan M. Olson, 1990) that EAJA has primarily become a tool 
for individual social security claimants, while playing a much less 
significant role amongst its intended beneficiaries. It is clear that 
EAJA must undergo some substantial revision if it is to achieve its 
initial objectives.

CONCLUSION
    In the federal court system, litigants are guaranteed certain due 
process rights to ensure that everyone has the opportunity for fair and 
impartial adjudication of disputes. However, many of these rights are 
systematically denied to employers facing allegations under the OSH Act 
because of the prohibitive loss of defense. Often the cards are stacked 
so high against employers that they are forced to settle even the most 
frivolous claims.
    The current system invites abusive prosecution and unjustly imposes 
costs on employers that are not violating the law. While damaging to 
all businesses, the costs of defense are particularly harmful to small 
businesses, like many ABC member firms, that lack the resources to 
defend against unreasonable prosecution. ABC strongly supports H.R. 
2731 as a first step towards leveling the playing field for small 
businesses. We look forward to a constructive dialog on how to improve 
both the OSH Act and EAJA in order to create a level playing field for 
small businesses. At this time, I am happy to answer any questions the 
committee may have.
                                 ______
                                 
    Chairman Norwood. Ms. Drummond, if H.R. 2731 were to become 
law, what do you suppose would happen? You say today 90 percent 
of the cases were settled, and it is pretty clear--I mean, 
anybody understands why they are settled. It is the lesser of 
two evils.
    What do you think would happen if this became law? How many 
would settle then, do you suppose?
    Ms. Drummond. Well, I think there are a couple of 
questions. First, I would hope that OSHA would assess in its 
enforcement efforts where they enforce and how they enforce, 
because maybe in an ideal world 100 percent would settle 
because they would be going after the right cases; but if they 
went after the exact same profile of cases, then I would say 90 
percent would no longer settle, that you would have in fact a 
lesser percentage, because they felt that they had not violated 
the law and had some hope of recouping some costs in attorneys' 
fees would in fact defend the case.
    Chairman Norwood. Well, the question was intended to assume 
that it would be the same.
    Ms. Drummond. The same profile, right. But I am hoping that 
in the good policy environment, that OSHA may reassess how it 
would enforce.
    Chairman Norwood. Mr. Robson, have you ever considered 
running for Congress?
    Mr. Robson. My dad was a supervisor. That is as far as the 
family trait goes.
    Chairman Norwood. One of the reasons I ran for Congress was 
because of an OSHA inspector. It wasn't the only reason, but it 
was one of them, and everybody on this Subcommittee loves to 
say that they are for working families. And we are. I mean, I 
think we are all for working families. Do you consider your 
business a working family?
    Mr. Robson. Yes. That is all there is, and there are many 
of them in our same situation there. And we are such a small 
community, that when Robson got hit up for OSHA, within 2 days 
the whole neighborhood knew.
    Chairman Norwood. Well, of course. Everybody knows.
    Mr. Robson. And they want to know what I am going to do, 
are you going to send them 300 bucks, And I say, no, I ain't 
going to send them 300 bucks. And then the first thing they did 
was chop it in half. Well, now, door No. 1, door No. 2, door 
No. 3, what is going on there?
    Chairman Norwood. I am delighted that you were willing to 
fight. More of us need to fight, particularly us working 
families who are out there and face this big giant Federal 
agency. Tell me exactly what happened. Did you use the bucket 
on a tractor? What did they cite you for?
    Mr. Robson. We are a little ahead of that now. We have a 
set of forks mounted on the front loader on the tractor and had 
a pallet on it.
    Chairman Norwood. I have got one of those.
    Mr. Robson. And we were probably all of 5 foot off the 
ground.
    Chairman Norwood. I understand.
    Mr. Robson. Now, granted we--.
    Chairman Norwood. And so you were actually level, then, 
rather than standing in the bucket?
    Mr. Robson. Until the oil drips, yes. We are very--you know 
what I am.
    Chairman Norwood. I do know that.
    Mr. Robson. That is--
    Chairman Norwood. So this guy comes tooling out here, and 
he says, gee, you are an absolute criminal. Go on, tell me.
    Mr. Robson. Well, they didn't say that that day, because if 
they would have started that, I would have probably thrown them 
out on the road, which most farmers do. But I didn't do that. 
Very nice lady.
    Chairman Norwood. I threw mine out, but go ahead.
    Mr. Robson. But, no, a very nice lady. I had no problem 
with her. And then a month later comes the violation. It had 
nothing to do with the money. It was the word ``serious'' on 
the violation, and once your business has a serious violation, 
then the next one, there is no qualms asked.
    Chairman Norwood. And the fine for you to get even with the 
Federal Government was--you were to pay how much for being 5 
feet off the ground?
    Mr. Robson. Three hundred dollars.
    Chairman Norwood. Three hundred bucks. But in your mind, 
this affected you in your community when they say serious 
violation, for which everybody knows that affects your 
reputation. That is different, isn't it?
    Mr. Robson. I would hope that OSHA is there to help me, not 
hinder me.
    Chairman Norwood. Well, I wonder what it would have cost 
you to obtain an attorney and fight them? Or maybe you have.
    Mr. Robson. It has only been a year. So they haven't done 
anything yet. I don't know how long it takes to go. It has been 
over a year.
    Chairman Norwood. Did you consider hiring an attorney and 
taking them to court?
    Mr. Robson. Basically I believe that when I get in front of 
a judge and a normal panel, I don't think I will have much of a 
problem. I don't know.
    Chairman Norwood. But you still have to pay?
    Mr. Robson. Yes. I will have to pay.
    Chairman Norwood. So there is no way to win.
    Mr. Robson. It is a lose-lose situation.
    Chairman Norwood. Or you pay twice as much and clear your 
name.
    Mr. Robson. But hopefully I am going to help out the next 
person coming down the pike that maybe doesn't have the 
gumption to maybe go up and change anything.
    Chairman Norwood. Well, that is what I am trying to do, 
too, with this legislation. It is not fair to make the 
taxpayers take on the Federal Government that has an unlimited 
amount of dollars from you and me, to take you to court.
    Mr. Knott, how much have you ended up spending on legal 
fees?
    Mr. Knott. Probably up into the hundreds of thousands.
    Chairman Norwood. My word.
    Mr. Knott. They had a case recently where we had a tank 
with hydrogen nitrogen in it. The OSHA inspector came in and 
said, this is hazardous to human life. It is a covered tank, 
because people have to go in there. I said, that's right, but 
we take the cover off and the hydrogen and nitrogen disappear. 
And he said, Mr. Knott, I have a Bachelor of Science degree in 
chemistry, and I am telling you, you are wrong. So we went 
through the proceeding. The fine for that, by the way, for 
endangering my associates' lives was $11,250.
    So we went to the hearing, and the ALJ found in his favor, 
said he has a Bachelor of Science degree in chemistry, so 
therefore he knows that hydrogen is really heavier than air, 
and Mr. Knott is not a credible witness. So guess what? I 
appealed that.
    Chairman Norwood. So the fines would have totaled how much?
    Mr. Knott. $11,250 was what he wanted, and it will be 
probably, I don't know, 5, 6, 7 times that before I get 
finished.
    Chairman Norwood. So you can't win either.
    Mr. Knott. What is that?
    Chairman Norwood. You can't win either, at least from an 
economic point of view.
    Mr. Knott. If the U.S. Court of Appeals, right here in 
Washington, D.C., agrees that hydrogen is heavier than air, 
then yep, I will be in trouble. And I don't know what the next 
step is, but if there is one, I am going to take it.
    Chairman Norwood. Well, this bill is about working families 
who are trying to run small businesses, which are the backbone 
of this country, and that is the whole purpose of what we are 
trying to do here.
    The other thing is, and I may say this a number of times, 
besides protecting working families, the objective of the 
legislation is to just give OSHA a reason to stop and think 
before they follow forward with some of this questionable 
litigation that they do and some of these questionable 
citations that they do. That is all we are trying to do. It is 
just folks, use some common sense.
    Mr. Knott. Let them be at risk.
    Chairman Norwood. Well, it is risk against me and you, but 
it is a complex. Mr. Owens, you are now recognized for 
questioning.
    Mr. Owens. What is the net worth of your company, Mr. 
Knott?
    Mr. Knott. The net worth of my company? It is somewhere--
let's see. It is under $5 million.
    Mr. Owens. Under $5 million?
    Mr. Knott. Yep.
    Mr. Owens. You have less than 500 employees?
    Mr. Knott. No. No. No. I have a little over a hundred. And 
I started it in an abandoned mill with $87,500. That is all the 
cash I had. And the mill was 20,000 square feet, and by the end 
of next month, it will be 391,000 square feet. And there are 
many OSHA stories that go with that.
    Mr. Owens. Do you have a special mission that you set up 
for yourself to fight OSHA, because you seem to welcome cases 
and want to go after the cases and extend them?
    Mr. Knott. I do have a special mission, yes. And you know, 
in June 1956 I took an oath, and the oath was that I promised 
to uphold the Constitution of the United States and to 
protect--
    Mr. Owens. Do you consider yourself being harassed by OSHA?
    Mr. Knott. And to protect this country against all enemies, 
foreign and domestic.
    Mr. Owens. Do you have too many violations that you 
consider yourself to be a target of harassment?
    Mr. Knott. Absolutely. No question about it.
    Mr. Owens. How many violations have you gotten?
    Mr. Knott. I have probably been through, I don't know, 15 
to 20 of those things over the years.
    Mr. Owens. Thank you.
    Ms. Drummond, what is the pattern? You see, we don't have a 
record that OSHA issues that many violations. They don't have 
that many inspectors. When you compare the ratio of inspectors 
to the number of businesses out there they have to inspect, the 
likelihood that you are going to get visited by an OSHA 
inspector in your lifetime is very low. But yet you also give 
the impression that you are often being harassed by OSHA 
inspectors looking at small trivial kinds of problems. Do you 
have any statistics just to back that up?
    Ms. Drummond. What I wanted to point out is that when an 
OSHA inspector goes in--and I would support 100 percent there 
are not enough resources at OSHA for proper enforcement 
activities, but the enforcement activities aren't as focused as 
they should be, and I think there are some attempts to try to 
focus on the most serious injuries and illnesses.
    There is, instead, that once they are in a site, they are 
looking for a violation, and how much time are they spending on 
a site that doesn't have--.
    Mr. Owens. You represent an association; that people in the 
association would contend that they have OSHA inspectors 
hanging around quite a bit to the point where they are being 
harassed?
    Ms. Drummond. I have never represented that they were being 
harassed. I represented specifically that when an OSHA 
inspector goes to a site, it is hard for an inspector to leave 
without giving a citation. And that would be an interesting 
statistic for an inquiry, is how many times someone goes on a 
site and walks away without a citation and how much time they 
are spending. But I would like to say that I am not talking 
about the harassment. I am talking about OSHA's focus should be 
on the most serious fatalities and injuries, and fatalities 
specifically, because they do have limited resources.
    Mr. Owens. Thank you.
    Mr. Nelson, you did have some figures about the number of 
inspections?
    Mr. Nelson. OSHA over the last few years has been doing 
about 35,000 to 37,000 inspections a year. Contested cases that 
get filed with the Occupational Safety and Health Review 
Commission are somewhere around 2,200 to 2,400 a year. I can't 
speak to the number of violations in comparison to the number 
of inspections.
    I think it would be interesting in assessing legislation 
like this to have something more than anecdotal evidence. I am 
not sure whether OSHA can provide that or not, but the notion 
that OSHA is over-enforcing or should overlook, when it is at a 
workplace, a minor violation that it uncovers seems unwarranted 
to me.
    Mr. Owens. We have figures over the last 4 years, 6.5 
percent of the inspections performed by OSHA resulted in 
contested citations, 6.5 percent. Fiscal year 2002, only 5.7 
percent resulted in contested citations.
    Mr. Nelson. That I think jibes with the number of about 
22,000 as compared to 35,000 inspections.
    Mr. Owens. Now, there is no private right of action for 
workers. If this bill became law, H.R. 2731 became law, to 
balance this, might it not be fair to provide workers with a 
private right to sue their employer for alleged safety and 
health violations?
    Mr. Nelson. I would say absolutely. If OSHA decides not to 
pursue a violation right now, there is nothing that the workers 
can do about it.
    Mr. Owens. I think my time is up.
    Chairman Norwood. Thank you. Mr. Owens, what was your 
percentage on contested violations?
    Mr. Owens. 6.5 percent of the inspections resulted in 
contested violations over the last 4 years.
    Chairman Norwood. Yes. Now, Ms. Drummond, explain why it is 
that low. You did earlier, and I don't think--.
    Ms. Drummond. It is simply that it is a cost analysis for a 
business, and I think that the other witnesses have kind of 
attested to that. You have a violation that is going to cost 
you $8,400 and you know attorney fees are going to upward of 
$20,000. It is not--.
    Mr. Owens. The easy trial system would cost you $20,000.
    Ms. Drummond. The easy trial system is easier than the 
regular system, but I would not say it is cheap.
    Mr. Owens. You still think it's $20,000?
    Ms. Drummond. I would say it would easily cost--let me use 
this example. It would easily cost as much for the defense, I 
would say, if you had a reputable attorney, especially in 
metropolitan areas, than it would cost for the violation. It is 
an easy mathematical decision, but it does go to the heart of 
it and I think this gets to the bottom of it, though we are 
talking about how do you change OSHA's behavior, I would like 
to focus on how do you bring some equity to the process when 
you have a very small business--and we are talking very small 
business. We are not talking about SBA-size standards. I mean, 
the construction industry, it is 27.5 million in receipts. I 
mean, that is far different than a million and a half in net 
worth.
    Even though those are a bit apples and oranges, still there 
is a difference. And when you are a business who knows that you 
are going to be walking into an environment where you are 
probably leveraging those assets in order to take a chance that 
you know in your heart, you believe in your heart that you are 
right, there was no intent and you would like to clear your 
name and you don't want to have long-term consequences, whether 
it is in terms of reputation or prohibitions for further 
business reasons, there should be some equity that you are not 
facing what is perceived to be endless resources. And we all 
know that maybe there are finite resources with OSHA, but there 
are not endless resources.
    Mr. Owens. And you believe one of the actions is more and 
better-trained OSHA enforcement folks, fewer mistakes?
    Ms. Drummond. Let me say, Congressman Owens that ABC 
financed one of its experts in steel erection to help in the 
training of compliance officers, in specializing in 
construction and especially the steel erection standard, which 
was a tremendous rulemaking procedure that was intended to 
prevent fatalities in construction and serious injuries. And we 
put our money where our mouth is when it comes to training 
compliance officers on the construction industry.
    Chairman Norwood. Thank you. Just as a personal observation 
of somebody who has been in small business all his life, one of 
the ways the Federal attorneys win cases is that they have an 
unlimited amount of money to spend, and they cause these cases 
to be as expensive as they possibly can by dragging them out 
and can automatically win that way, because a small business 
defendant just can't stand that. It ought not to cost a lot of 
money, but that is one of their ways of winning.
    Mrs. Biggert, you are now recognized, ma'am, for questions.
    Mrs. Biggert. Thank you very much, Mr. Chairman. In 1999 
the CBO scored legislation providing for attorney fees for both 
the NLRB and OSHA at under $5 million per year. It seems like 
that covered employers with $7 million in net worth. This bill 
really has a threshold of $1.5 million and less than 100 
employees. Does this have significance to the industries like 
those that you represent?
    Either Mr. Knott or Ms. Drummond.
    Ms. Drummond. It does have significance, and I think it may 
be well worth the Subcommittee evaluating and discussing with 
the SBA how they make their size determinations. Whether you 
adopted those size determinations or some sort of formula that 
was similar, you really have to look at the capital intensity 
of an industry to determine what would be an adequate-size 
standard depending on the industry type. Construction has a 
very, very low cash-flow issue. You look at manufacturing, they 
have intense capital investments. So you may want to determine 
if the size standard would be more appropriately evaluated 
according to industry types, and the Small Business 
Administration has a size standard office that specializes in 
that.
    Mrs. Biggert. It seems like from the testimony that we have 
heard, are there any cases where the business wins?
    Ms. Drummond. Few.
    Mrs. Biggert. A few?
    Ms. Drummond. Few. I am trying to think of one good 
example. There are a few. There are so few of them that they 
really don't set much of a standard. I mean, even when OSHA was 
challenging its prior determination interpretation under the, I 
believe it is the Briggs case, the court held that prevailing, 
that the small business defendant could not in fact collect, 
because they thought it was substantially justified for OSHA to 
pursue the case, even though they are now taking a different 
interpretation of its regulation. So that is the type of thing 
where it is very hard to overcome that substantially justified 
standard.
    Mrs. Biggert. And what is the next step, just in procedure, 
like with the EAJ, and since that probably is the standard for 
this bill, to pursue an appeal? How does the appeal work in 
this case?
    Ms. Drummond. You may go to the court of appeals, or you 
may go before the Commission. So going to the court of appeals 
is the route I believe that Mr. Knott is taking.
    Mrs. Biggert. Is that correct, Mr. Knott, you go right from 
OSHA?
    Mr. Knott. From the ALJ hearings, you go to the court of 
appeals.
    Mrs. Biggert. And that is the Federal court?
    Mr. Knott. Yes.
    Mrs. Biggert. Let me ask just one more question. Let's say 
your employer is cited for several different violations and 
they win on one count and then lose on the others. Under this 
bill, would they still be able to collect attorney fees for the 
count that they win on?
    Ms. Drummond. The standard for the Federal court system, 
and generally adopted by the States for the definition of a 
prevailing party, and that applies to other Federal statutes 
and State and local statutes that provide prevailing party 
awards, the standard is the prevailing party is one who 
succeeds in a significant issue and receives some of the relief 
sought in bringing the action. So it is really a mixed bag.
    So if it is a mixed bag and let's use the scenario you 
presented where they win on one issue but then lose on three or 
four, it is unlikely, unless it was a significant issue if it 
was the primary citation, it was the most serious citations and 
the others were only paperwork citations. Then you might see an 
environment where the judge would in fact provide that they 
would be considered the prevailing party.
    Some jurisdictions, such as the 7th Circuit and the 11th 
Circuit, have a little bit higher standard, where you have to 
substantially benefit from the outcome, which is a little bit 
different than some benefit.
    Mrs. Biggert. Thank you. Thank you, Mr. Chairman. I yield 
back.
    Chairman Norwood. Thank you, Mrs. Biggert.
    I would now like to recognize my colleague and friend from 
Georgia, Ms. Majette. Are you ready for questioning?
    Ms. Majette. Thank you, Mr. Chairman, and I thank the 
panelists for being here to offer your testimony today.
    And let me preface my remarks by saying that I empathize 
with the situations that all of you have described, and I do 
that from the standpoint of having been an attorney and when I 
worked at Legal Aid, we were subject to the issue of attorneys' 
fees and how those got paid. I have been a small business owner 
as a private practitioner, and then I served as an 
administrative law judge on the Workers Compensation Board in 
Georgia before serving on the State court. And I resigned that 
to come here and have a lot of fun serving in Congress.
    So I look at this as a situation from those different 
perspectives and the need for balancing the concerns of 
employers and small business owners with the need to protect 
workers and making sure that they are in an environment that 
allows them to do the work that they need to do, in a safe and 
secure manner, so that they can be productive employees for 
their employers.
    And Mr. Knott and Mr. Robson, the situations that you 
described really, frankly, should not have happened. And I have 
no doubt that those situations were ones that occurred in the 
manner in which you described them because of the experiences 
that I have had. But it sounds to me and my experience has been 
that a lot of times the root of the problem is a lack of 
training or poor communication on the part of the--in your case 
I guess, Mr. Knott, on the part of the OSHA employee.
    And so my question--and I would--if time permits, I would 
like each of you to address it from your own perspective. But 
would you agree with me that rather than putting in place this 
kind of legislation that I think perhaps wouldn't actually 
address the root of the problem, that perhaps we should 
concentrate on making sure that the OSHA staff and employees 
have sufficient training, that they get the skills development 
that they need, that they have those communication skills, and 
that the OSHA inspectors have the resources that they need to 
be able to do the job properly? Because I think in the 
situations that you described, something went wrong very early 
on, and it shouldn't have gotten to the point at which tens of 
thousands of dollars were being expended on lawyers to resolve 
the issue.
    So if each one of you could address that proposition, I 
would appreciate it Mr. Robson, or was that all too 
complicated?
    Mr. Robson. No. I think we are past that point as far as 
the lawyer fees and all that. We have created the monster now, 
and we should try to control it a little bit, that is all. I am 
not against OSHA. I run a small business. I want my employees 
to be safe. I am not against OSHA one iota, period; but they 
have gotten too big and too powerful now, and when they come up 
against the little man, there is nothing we can do.
    Ms. Majette. All right. Thank you. Mr. Knott?
    Mr. Knott. I had a classic case involving an--
    Chairman Norwood. Pull your mike over just a little bit, 
Mr. Knott.
    Mr. Knott. I had a classic case involving an accident. 
There was a man who had fractured a couple of fingers, and the 
OSHA inspector said that his arm had gone between some rolls up 
to his elbow, and therefore that was, you know, a very serious 
thing. Had his arm gone between those rolls, which is 15 
sixteenths of an inch apart, it would have been 18 inches wide. 
And when we got that inspector up on the stand we said, how do 
you know that the arm went in up to the elbow? ``well, I saw 
it'' is what that inspector said.
    But anyway, the attorney came out, the prosecuting attorney 
came out and I took him for a walk around the plant. And he 
took me aside, and he said, ``Mr. Knott, you have got a lot 
going on here. I can't understand how a minuscule thing like 
this will cause you so much trouble.'' He said, ``Look, give us 
a little money and we will go away.'' I said, ``I can't do 
that. These inspectors just lie, and I want that exposed.'' He 
said, ``Well, I will tell you right now, it is going to cost 
you a lot of time and money.'' and by God, he proved it. He 
deposed 10 witnesses. We went up to Worcester to the hearing. 
It took 3 days, and he had 10 people come up to the hearing, 
including me. So this is where the cost goes up.
    Now, if I had given him a little money and he would have 
gone away, would that be the thing to do? I can't do that. I 
really can't do that. I don't think it is right.
    Ms. Majette. I see my time is up.
    Chairman Norwood. Thank you, Ms. Majette.
    Mr. Kline, you are up. Five minutes for questions.
    Mr. Kline. Thank you, Mr. Chairman, and I will keep it 
under 5 minutes, noting the lateness of the hour and the ordeal 
we have already put the witnesses through.
    I want to add my thanks to that of my colleagues for your 
being here today and for your patience. I know it can be 
enormously upsetting and disruptive when we suddenly get up and 
walk out and don't reappear for an hour or more and you have 
great questions in your mind about what we could possibly be 
doing for the good of the country during that period of time, 
and we have the same questions.
    Having said that, I was just fascinated by the testimony, 
and I am sure that Mr. Nelson is right; it would be good to 
have some more empirical data to use. But the anecdotal stories 
that you have told are very touching. And by coincidence, we 
seem to all at one time or another have worked in the nursery 
business, so perhaps there is a special attraction or 
fascination there.
    It is clear that what we are trying to do in this 
legislation is make sure that OSHA is doing its job correctly, 
is not abusing power and that businesses have a reasonable 
recourse. And so, again, in the interest of time and to keep my 
time short here, I would like to address my question to Ms. 
Drummond.
    You are representing some 23,000 businesses, most of them 
small businesses in the building and contracting business. We 
have talked about the number of cases that are settled or 
contested, and you surely have input from your members. If we 
pass this legislation, what is your sense of the number of 
times that your members would take advantage of this and be 
able to fight the big bureaucracy--let's address that first--
and then what the consequences of that might be.
    Ms. Drummond. For the smallest companies, and that would be 
the very smallest companies, I think that they would at least 
feel that they had a good shot at having their story heard 
before a party, and that would be an ALJ, that was unbiased and 
would give them an opportunity to express themselves and to 
assure their side is heard. I think that there would be more 
likelihood of challenging it. That doesn't mean that in the end 
maybe OSHA does prevail and we find out that, you know, OSHA is 
not being abusive. But I think it is important that we find 
that out, because in the current system, while not intended to 
be unfair, it has a consequence of being unfair because the 
smallest companies don't have that opportunity to have their 
say. So I think that would be the consequence of it.
    Mr. Kline. So your sense is that there is a fairly large 
number of your members who would seek to have their day in 
court if this legislation were to pass?
    Ms. Drummond. Those that fall within the standard. And I 
would say to you--I would caveat that that would probably be a 
small percentage.
    Mr. Kline. I understand the distinction. The point though I 
guess what I am trying to get at is if more people were to seek 
their day in court, I would think the objective here, of 
course, is to make sure, as the Chairman has pointed out, that 
the OSHA inspectors are careful to make sure that when they are 
bringing a citation, it is for a legitimate offense, knowing 
that if they go to court and lose, that they have to pay for it 
with appropriated funds, and the inspector, I am sure, would 
feel some heat from his or her boss if that were to happen. Is 
that your sense of where we are in this?
    Ms. Drummond. Yes, Congressman. And then I will respond to 
the question regarding whether enforcement education alone 
works. And I think unfortunately you do need the carrot and the 
stick. And if you do have to bring in an enforcement official 
to testify or to be deposed, you may in fact reveal the 
discrepancies or the inaccuracies that underlie the citation. 
And I think that is important to flesh that out. And if you 
have a small business that believes that they have an 
opportunity to do that, you are going to have a better system, 
and you are going to have an agency that will invest more of 
itself in not only educating its enforcement officers on the 
law but also investing in them the veracity of their 
enforcement activities.
    Mr. Kline. Thank you. I yield back.
    Chairman Norwood. Mr. Owens.
    Mr. Owens. Just one clarification. Mr. Robson, do I 
understand correctly you were inspected by the State of 
Michigan and not by OSHA?
    Mr. Robson. My OSHA.
    Mr. Owens. State of Michigan. OK. So you have not dealt 
with OSHA at all?
    Mr. Robson. Not in a year.
    Mr. Owens. We are--.
    Mr. Robson. Not in a year. They cited me the citation. I 
sent back the paperwork. I am waiting to--.
    Mr. Owens. So State of Michigan, huh?
    Mr. Robson. Yes.
    Mr. Owens. And you have also not hired an attorney, so you 
have not paid any legal fees?
    Mr. Robson. No.
    Mr. Owens. Thank you.
    Chairman Norwood. You are here representing the Farm 
Bureau?
    Mr. Robson. Yep.
    Chairman Norwood. Not necessarily your case.
    Mr. Robson. Nope.
    Chairman Norwood. My observation is in Georgia that they 
take their marching orders out of Washington, though, and a lot 
of the way they act--I am talking about the Georgia OSHA. They 
take it a lot from observing and talking to OSHA out of 
Washington.
    Let me conclude. I could do this the rest of the day, but 
that storm is a-coming, and we all have got to scatter. My 
sense of it is that none of us are very far apart here. Are 
there enough inspectors? No, and there never will be. Just like 
there are only 2,000 Federal agents to deal with illegal 
immigrants in this country, there will never be enough Federal 
agents to deal with illegal immigrants, and there is never 
going to be enough OSHA inspectors. But besides that, we need 
to make sure first that they spend their time wisely and they 
deal with problems where there is the greatest result for the 
community, for the country, in safety and health, and that 
obviously is spending their time in the most dangerous 
categories out there rather than haphazardly moving around.
    And I conclude we need this legislation if you are the only 
two people on Earth that have been involved in this. I mean, 
there is nothing that gets me going any more than a Federal 
agency picking on small working families who are trying to make 
a living, and if there is only two, so be it. We need to change 
that. That is not what the Federal Government's job is to do, 
to find one person or 50, but to mistreat people who are out 
there trying to make a living, paying their taxes, doing all 
the things the best they know how to do. And for an inspector 
of any kind to spend their time--and in some cases it really is 
they are after somebody. I know you don't want to hear that, 
but it is true. They really, absolutely, pick on people 
sometimes, and my observation is that when you get that Federal 
badge, you grow 4 feet taller. And I don't even know if I am 
complaining about that, but I know that is a fact. Sometimes 
they just simply don't know how to deal with people.
    So, Mr. Knott and Mr. Robson, if you are the only two 
Americans that this bill would help, I think we ought to pass 
it, and we ought to sign it into law and live with the 
consequences, because the consequence is going to be those 
inspectors that have grown 4 feet taller are going to be very 
careful that they don't abuse their rights and their 
responsibility to help make this country healthier and safer. 
And I believe this would do it.
    Mr. Kline hit it on the head. All you need to do is a few 
of these, and somebody has got a boss over there somewhere who 
is going to ask you why you are in court and having to pay the 
court costs. And maybe that means they need a new inspector if 
he can't stay out of court because he is filing bad complaints.
    So I hope that we will be able to pass this in the House 
and the Senate. And the next thing immediately to do is pay 
attention to what is going on out there should this be law. We 
will find out then how many people actually feel like they are 
being trounced upon, I guess, by an OSHA inspector, that they 
cannot in any way afford to defend themselves or their name, it 
is just too costly. Under this new system, we will find out how 
many appeals there really would be. And I will tell you what I 
will bet. I will bet within 5 years you will find a lot less 
appeals, because there is going to be a lot more forethought 
given before people start writing tickets.
    I thank all of you. I hope all of you are trying to get 
home tonight, too. It is going to get wet around here tomorrow. 
We are grateful, really grateful for your time and your 
willingness to come and testify before the Subcommittee, and we 
will keep trucking along and trying to see if we can't do 
something up here right and get this thing signed into law. 
Thank you all. The Subcommittee is adjourned.
    [Whereupon, at 4:33 p.m., the Subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

Memorandum from Jon O. Shimabukuro, Legislative Attorney, American Law 
   Division, Congressional Research Service, on ``Size Standards and 
 Covered Employers Under Selected Statutes,'' Submitted for the Record

October 8, 2003

TO: House Committee on Education and the Workforce
    Attention: Chris Jacobs

FROM: Jon O. Shimabukuro
    Legislative Attorney
    American Law Division

SUBJECT: Size Standards and Covered Employers Under Selected Statutes

    This memorandum responds to your question concerning size standards 
and covered employers under selected statutes. The Family and Medical 
Leave Act (``FMLA''), the Worker Adjustment and Retraining Notification 
Act (``WARN Act''), Title VII of the Civil Rights Act (``Title VII''), 
the Age Discrimination in Employment Act (``ADEA''), and the Americans 
With Disabilities Act (``ADA'') each define an employer to be either a 
person or business entity having more than a specified number of 
employees. 1 Employers retaining fewer employees than the 
number specified by the statute are not subject to the statute's 
requirements. You asked for a discussion of Congress's rationale in 
adopting the various size standards. Although congressional reports and 
debates related to some of the statutes include brief discussion on the 
size standards, they still do not provide clear explanations for the 
adoption of the specific standards. A review of secondary sources, such 
as legal treatises and law review articles, also failed to uncover 
Congress's reasons for establishing the various employee thresholds.
---------------------------------------------------------------------------
    \1\ See FMLA, Sec. 101(4)(A), 29 U.S.C. Sec. 2611(4)(A) (``The term 
``employer --(i) means any person engaged in commerce or in any 
industry or activity affecting commerce who employs 50 or more 
employees for each working day during each of 20 or more calendar 
workweeks in the current or preceding calendar year . . .''); WARN Act, 
Sec. 2(a)(1), 29 U.S.C. Sec. 2101(a)(1) (``As used in this chapter--(1) 
the term ``employer'' means any business enterprise that employs--(A) 
100 or more employees, excluding part-time employees; or (B) 100 or 
more employees who in the aggregate work at least 4,000 hours per week 
(exclusive of hours of overtime)''); Title VII, Sec. 701(b), 42 U.S.C. 
Sec. 2000e(b) (``The term ``employer'' means a person engaged in an 
industry affecting commerce who has fifteen or more employees for each 
working day in each of twenty or more calendar weeks in the current or 
preceding calendar year, and any agent of such a person . . .''); ADEA, 
Sec. 11(b), 29 U.S.C. Sec. 630(b) (``The term ``employer'' means a 
person engaged in an industry affecting commerce who has twenty or more 
employees for each working day in each of twenty or more calendar weeks 
in the current or preceding calendar year . . .''); ADA, 
Sec. 101(5)(A), 29 U.S.C. Sec. 12111(5)(A) (``The term ``employer'' 
means a person engaged in an industry affecting commerce who has 15 or 
more employees for each working day in each of 20 or more calendar 
weeks in the current or preceding calendar year, and any agent of such 
person . . .'').
---------------------------------------------------------------------------
    With respect to two statutes, the FMLA and Title VII, congressional 
reports and debates show Congress thinking about the size standards 
with regard to small employers. During debate on the FMLA, at least two 
members commented on the measure's fifty employee threshold for covered 
employers. These comments suggest a general understanding of an intent 
to exempt small employers from the FMLA's coverage. The comments do 
not, however, provide insight on why Congress chose fifty employees as 
the numerical threshold.
    In discussing the treatment of temporary staffing organizations 
that retain few permanent employees, but assign numerous temporary 
employees to client offices, Rep. Butler Derrick noted that ``[s]ince 
the 50 employee exemption was included in recognition of the problems 
faced by small employers, it would seem inconsistent to require small 
temporary help offices to cover their staff employees if they number 
less than 50. 2 Similarly, Del. Eleanor Holmes Norton 
commented that ``[s]mall businesses will be well shielded from the 
effects of H.R. 1. It is the family members who work for them who will 
still have many struggles. 3 The debates on the FMLA do not 
otherwise appear to offer a more detailed explanation for choosing 
fifty employees as the numerical threshold.
---------------------------------------------------------------------------
    \2\ 139 Cong. Rec. 1994 (1993).
    \3\ 139 Cong. Rec. 1999 (1993).
---------------------------------------------------------------------------
    Although congressional reports that accompanied Title VII do not 
explain how the employee threshold in that statute was chosen, a House 
report on the Equal Employment Opportunity Act of 1972 (``EEOA''), a 
measure that amended Title VII, does discuss the size standard with 
regard to small employers. 4 Prior to the passage of the 
EEOA, persons retaining twenty-five or more employees were considered 
to be ``employers'' for purposes of coverage under the statute. The 
EEOA amended Title VII to include within the definition of the term 
``employer'' persons retaining fifteen or more employees.
---------------------------------------------------------------------------
    \4\ See H.R. Rep. No. 92-238, at 20 (1971), reprinted in 1972 
U.S.C.C.A.N. 2137, 2155.
---------------------------------------------------------------------------
    According to the House report, the change was made in recognition 
of discrimination being ``equally invidious whether practiced by small 
or large employers.'' 5 The House Committee on Education and 
Labor, the committee responsible for the report, observed that
---------------------------------------------------------------------------
    \5\ Id.
---------------------------------------------------------------------------
        [b]ecause of the existing limitation . . . proscribing the 
        coverage of Title VII to 25 or more employees or members, a 
        large segment of the Nation's work force is excluded from an 
        effective Federal remedy to redress employment discrimination . 
        . . the Committee feels that the [Equal Employment Opportunity] 
        Commission's remedial power should also be available to all 
        segments of the work force. 6
---------------------------------------------------------------------------
    \6\ Id.
---------------------------------------------------------------------------
    The amendment suggests Congress's interest in excluding only the 
smallest employers from coverage under Title VII.
    While it is possible that Congress was similarly concerned about 
small employers when it established the size standards in the WARN Act, 
the ADEA, and the ADA, language to support that concern was not found 
in a review of the congressional reports and debates that accompanied 
those statutes. In general, any discussion of the size standards in the 
three statutes appears to have been limited to a reiteration of those 
standards. For example, the House report on the ADEA states simply: 
``The term ``employer'' is so defined as to include only persons having 
25 or more employees for each working day in each of 20 or more 
calendar weeks in the current or preceding calendar year. 7 
As noted, secondary sources were also unable to explain why Congress 
chose the specified employee thresholds.
---------------------------------------------------------------------------
    \7\ H. Rep. No. 805, at 11 (1967), reprinted in 1967 U.S.C.C.A.N. 
2213, 2223.
---------------------------------------------------------------------------
    While Congress seems to have been concerned about small employers 
being burdened by the requirements imposed by the five statutes, it is 
unclear why the numerical thresholds used in the statutes were chosen.
                                 ______
                                 

Memorandum from Jon O. Shimabukuro, Legislative Attorney, American Law 
 Division, Congressional Research Service, on ``Covered Parties Under 
      the Equal Access to Justice Act,'' Submitted for the Record

October 20, 2003

TO: House Committee on Education and the Workforce
    Attention: Chris Jacobs

FROM: Jon O. Shimabukuro
    Legislative Attorney
    American Law Division

SUBJECT: Covered Parties Under the Equal Access to Justice Act

    This memorandum responds to your question concerning the size and 
financial standards that are used in the Equal Access to Justice Act 
(``EAJA'') to determine who is a ``party'' under that statute. 
1 The EAJA seeks to remove economic deterrents to 
challenging government action by allowing certain individuals and 
organizations to recover attorney fees, expert witness fees, and other 
costs when they prevail against the United States. 2 Under 
the EAJA, a prevailing party may seek costs and fees related to an 
adversary adjudication or judicial proceeding. In general, a ``party'' 
is defined by the EAJA as either (a) an individual whose net worth did 
not exceed $2,000,000 at the time the adjudication was initiated or the 
civil action was filed, or (b) any owner of an unincorporated business 
or any partnership, corporation, association, unit of local government, 
or organization with a net worth not exceeding $7,000,000 at the time 
the adjudication was initiated or the civil action was filed, and with 
fewer than 500 employees at the time the adjudication was initiated or 
the civil action was filed. 3 An organization described in 
section 501(c)(3) of the Internal Revenue Code and a cooperative 
association defined in section 15(a) of the Agricultural Marketing Act 
shall also be considered ``parties'' regardless of the net worth of the 
organization or cooperative association. 4
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    \1\ Equal Access to Justice Act, Pub. L. No. 96-481, tit. II, 94 
Stat. 2325 (1980) (amending 5 U.S.C. Sec. 504 and 28 U.S.C. Sec. 2412). 
This memorandum supplements an October 8, 2003 memorandum, Size 
Standards and Covered Employers Under Selected Statutes. A table that 
compares the size standards discussed in that memorandum with the 
standards discussed in this memorandum is included.
    \2\ See S. Rep. No. 96-253 (1979).
    \3\ See 5 U.S.C. Sec. 504(b)(1)(B) (`` party'' means a party, as 
defined in section 551(3) of this title, who is (i) an individual whose 
net worth did not exceed $2,000,000 at the time the adversary 
adjudication was initiated, or (ii) any owner of an unincorporated 
business, or any partnership, corporation, association, unit of local 
government, or organization, the net worth of which did not exceed 
$7,000,000 at the time the adversary adjudication was initiated, and 
which had not more than 500 employees at the time the adversary 
adjudication was initiated; except that an organization described in 
section 501(c)(3) of the Internal Revenue Code of 1986 . . . exempt 
from taxation under section 501(a) of such Code, or a cooperative 
association as defined in section 15(a) of the Agricultural Marketing 
Act . . . may be a party regardless of the net worth of such 
organization or cooperative association . . .''); 28 U.S.C. 
Sec. 2412(d)(2)(B) (`` party'' means (i) an individual whose net worth 
did not exceed $2,000,000 at the time the civil action was filed, or 
(ii) any owner of an unincorporated business, or any partnership, 
corporation, association, unit of local government, or organization, 
the net worth of which did not exceed $7,000,000 at the time the civil 
action was filed, and which had not more than 500 employees at the time 
the civil action was filed; except that an organization described in 
section 501(c)(3) of the Internal Revenue Code of 1986 . . . exempt 
from taxation under section 501(a) of such Code, or a cooperative 
association as defined in section 15(a) of the Agricultural Marketing 
Act . . . may be a party regardless of the net worth of such 
organization or cooperative association . . .'').
    \4\ Id.
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    You asked for a discussion of Congress's rationale in adopting the 
size and financial standards used to determine who is a ``party'' under 
the EAJA. Although congressional documents describe a general interest 
in making it easier for individuals and small businesses to challenge 
government action, they do not provide clear explanations for why the 
specific standards were adopted. For example, when the EAJA was 
introduced, Sen. Pete V. Domenici explained:
        The basic problem this bill seeks to overcome is the inability 
        of many Americans to combat the vast resources of the 
        Government in administrative adjudication. In the usual case, a 
        party has to weigh the high cost of litigation or agency 
        proceedings against the value of the rights to be asserted. 
        Individuals and small businesses are in far too many cases 
        forced to knuckle under to regulations even though they have a 
        direct and substantial impact because they cannot afford the 
        adjudication process. In many cases the Government can proceed 
        in expectation of outlasting its adversary. The purpose of the 
        bill is to redress the balance between the Government acting in 
        its discretionary capacity and the individual. 5
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    \5\ 125 Cong. Rec. 1437 (1979) (statement of Sen. Pete V. 
Domenici).
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    Similarly, the Senate report that accompanied the EAJA discusses 
individuals and small businesses with respect to the term ``party'' 
without identifying the reasons for choosing the specific standards: 
``The definition thus establishes financial criteria which limit the 
bill's applications to those persons and small businesses for whom 
costs may be a deterrent to vindicating their rights.'' 6
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    \6\ S. Rep. No. 96-253, at 17 (1979).
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    A review of secondary sources, including law review articles, also 
failed to uncover Congress's reasons for establishing the size and 
financial standards used to define a ``party'' under the EAJA. Although 
Congress would appear to have been concerned with the economic 
deterrents that prevent individuals and small employers from pursuing 
claims against the government, it is not clear why the specific size 
and financial standards used in the EAJA were chosen.
                                 ______
                                 
    [An attachment follows:]

    [GRAPHIC] [TIFF OMITTED] T0137.001
    
   Letter from R. Bruce Josten, Executive Vice President, Government 
      Affairs, U.S. Chamber of Commerce, Submitted for the Record

[GRAPHIC] [TIFF OMITTED] T0137.002

   Letter from the OSHA Fairness Coalition, Submitted for the Record

October 1, 2003

The Honorable Charles Norwood
Chairman, Subcommittee on Workforce Protections
Committee on Education and the Workforce
U.S. House of Representatives
Washington, DC 20515

Dear Chairman Norwood:

    The OSHA Fairness Coalition, being dedicated to bringing greater 
balance to the Occupational Safety and Health Act (OSH Act), welcomes 
this opportunity to express our support for H.R. 2731, the Occupational 
Safety and Health Small Employer Access to Justice Act of 2003. This 
important bill would allow small businesses to recover attorney fees 
when prevailing in suits against the Occupational Safety and Health 
Administration (OSHA). On behalf of the various national trade 
associations and business organizations that comprise the OSHA Fairness 
Coalition, thank you for holding a hearing on this important issue.
    All too often small businesses pay unwarranted fines or settle 
meritless suits just to avoid expensive litigation against OSHA, an 
agency with seemingly endless resources. Indeed, few small businesses 
can afford to pay hundreds of thousands of dollars in attorney fees to 
dispute a $500, $1,000, or even $10,000 fine. As a result, meritless 
OSHA citations have become one more hidden ``cost of doing business'' 
that stunts the creation and growth of small businesses--a key source 
of American jobs and economic prosperity.
    In 1980 Congress attempted to protect small businesses from such 
abusive prosecution by enacting the Equal Access to Justice Act (EAJA). 
Over the years, however, EAJA has proven ineffective, primarily because 
agencies may escape paying fees, by demonstrating that they were 
``substantially justified'' in bringing the case or citation, or that 
``special circumstances'' existed to deny an award. Exacerbating this 
problem are court decisions upholding that an agency need only show 
that it had a reasonable basis for issuing the citation to be 
``substantially justified.''1 This is particularly troubling 
in OSHA cases, where the many technical and complex requirements of the 
OSH Act have made it fairly easy for OSHA to come up with creative 
arguments to meet these minimal criteria.
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    \1\ See e.g., Pierce v. Underwood, 487 U.S. 552 (1988).
---------------------------------------------------------------------------
    As a result, most small businesses choose to settle even the most 
meritless cases. Furthermore, employers that are successful against 
OSHA after deciding to engage in protracted litigation, end up being 
denied attorney fees--thus paying out more in fees than the original 
fine. This problem was detailed using both anecdotal stories and 
statistical evidence provided in testimony during hearings held on 
September 17, 2003, May 10, 1999, and February 5, 1998.
    H.R. 2731 remedies these deficiencies in EAJA by closing the 
substantial justification and special circumstances loopholes and 
awarding small businesses their attorney fees anytime they prevail 
against OSHA.
    We thank you for your leadership on this issue and look forward to 
working with you as H.R. 2731 moves through the legislative process.

Sincerely,

The OSHA Fairness Coalition
                                 ______
                                 

   Letter from Todd O. McCracken, President, National Small Business 
                 Association, Submitted for the Record

October 2, 2003

The Honorable Dr. Charlie Norwood
House Education and Workforce Subcommittee on Workforce Protections
United States House of Representatives
2125 Rayburn House Office Building
Washington, DC 20515

Dear Chairman Norwood:

    On behalf of the National Small Business Association (formerly 
National Small Business United), I'd like to thank you for your 
continued leadership in advocating for small businesses across the 
country. As we hear time and again, small businesses need and deserve 
protections against an over-reaching government, and we believe that 
your bill,, the Occupational Safety and Health Small Employer Access to 
Justice Act (H.R. 2731), will do just that.
    NSBA supports your efforts to ensure that small businesses get a 
fair shake in litigations with the Occupational Safety and Health 
Administration. H.R. 2731, if ratified, would allow small business 
owners to recoup legal fees spent when successfully defending 
themselves against egregious lawsuits filed by federal agencies. By 
enabling small businesses to reasonably defend themselves against both 
judicial review and adversarial adjudications, this legislation would 
ensure that small businesses are empowered to stand up for themselves 
rather than settle due to financial constraints.
    With the massive bankrolls of taxpayer dollars in the hands of the 
federal government, small businesses rarely stand a chance in defending 
themselves, and this legislation would alleviate a large proportion off 
that problem. Entrepreneurs must be given the same opportunity to 
defend their business against egregious enforcements as large 
businesses with large checkbooks have, and we believe that H.R. 2731 is 
a good start.
    H.R. 2731 will level the playing field for small business owners 
and encourage OSHA to give more thoughtful consideration to assessing 
enforcements against small businesses. We applaud your dedication to 
the America's small businesses and look forward to working with you to 
ensure their fair treatment by the federal government.

Sincerely,

Todd O. McCracken
President
National Small Business Association
                                 ______
                                 

  Letter from Randel K. Johnson, Vice President, Labor, Immigration & 
 Employee Benefits, U.S. Chamber of Commerce, Submitted for the Record

[GRAPHIC] [TIFF OMITTED] T0137.003

[GRAPHIC] [TIFF OMITTED] T0137.004

[GRAPHIC] [TIFF OMITTED] T0137.005

[GRAPHIC] [TIFF OMITTED] T0137.006

   Letter from James ``Skipper'' Kendrick, CSP, President, American 
         Society of Safety Engineers, Submitted for the Record

September 15, 2003

The Honorable Charlie Norwood
Chairman
Subcommittee on Workforce Protections
Committee on Education and the Workforce
U.S. House of Representatives
2181 Rayburn House Office Building
Washington, DC 20515-6100

RE:Comments on HR 2728, HR 2729, HR 2730 and HR 2731

Dear Chairman Norwood:

    The American Society of Safety Engineers (ASSE), on behalf of its 
30,000 member safety, health and environmental professionals, sincerely 
commends you for your continued leadership in advancing occupational 
safety and health issues. ASSE appreciates the opportunity to offer the 
following comments concerning the series of bills you have introduced 
aimed at addressing long-standing fairness issues in occupational 
safety and health regulation. As you know, ASSE is a professional 
society whose members are dedicated to workplace safety and health and 
who deal every day with the same concerns your legislations seeks to 
address.
    The Society has reviewed these bills and offers these comments to 
provide support for your efforts where we can but also to suggest 
changes that ASSE believes can help the bills achieve their overall 
purpose of improving the ability of small businesses in good faith to 
meet federal occupational safety and health requirements without 
excessive burdens that may take away incentives to make such 
improvements.

HR 2728 -- Occupational Safety and Health Small Business Day in Court 
        Act of 2003
    ASSE understands the reasoning underlying HR 2728, which is to 
codify giving some lee way to employers who, because of unique 
circumstances or despite their best efforts, miss the 15-day contest 
deadline to respond to Occupational Safety and Health Administration 
(OSHA) citations and, for the same reason, to give the Occupational 
Safety and Health Review Commission (OSHRC), on a case-by-case basis, 
the ability to reopen a final order for similar failures to respond.
    ASSE's members agree that 15 days can, in some unique 
circumstances, be an unnecessarily difficult deadline to meet.
    For a truly small business owner who is a sole manager and may be 
out of town on vacation, 15 days to contest may not be enough time. For 
some small businesses in remote areas, finding the appropriate safety, 
health and environmental resources to give advice or help respond 
adequately may be difficult in that time frame. For nearly all 
businesses in nearly all situations, however, 15 days is time enough, 
and as written, the suggested language-- unless such failure results 
from mistake, inadvertence, surprise, or excusable neglect --is far too 
broad. The language would give too many businesses too easily achieved 
excuses for not meeting the deadline and, ultimately, eviscerate the 
15-day deadline.
    ASSE urges a more practical solution to this problem, which is 
simply to expand the 15-day contest time period to 18 days. The 3 extra 
days could give just enough additional time to help small companies in 
unique situations without unduly compromising the requirement that 
employers respond quickly.

HR 2729 -- ``Occupational Safety and Health Review Commission 
        Efficiency Act of 2003''
    HR 2729 contains several provisions aimed at changing OSHRC. ASSE 
can only support one of these proposed changes--expansion of the OSHRC 
from 3 to 5 members. The work of the OSHRC could be more efficiently 
accomplished with the addition of two more members.
    ASSE cannot support the other provisions of this bill, however. 
Requiring members to be lawyers goes against the history of some very 
good, productive OSHRC members who were not lawyers and would mean that 
most safety, health and environmental professionals, who ASSE 
represents, could not be members no matter how otherwise well qualified 
they might be.
    Provisions that would give the President dramatically increased 
control over OSHRC members appointments also cannot be supported by 
ASSE. Giving the President at-will power to extend a member's term 
without limit as well as the power to remove a member ``for 
inefficiency, neglect of duty, or malfeasance in office'' effectively 
takes away any independence of the OSHRC. The power the Presidency has 
in making appointments should be power enough. Federal law already 
adequately protects the public from members who might abuse or neglect 
their responsibilities during their terms of office.
    Finally, if it is advisable to expand the OSHRC from three to five 
members, as HR 2729 proposes, ASSE does not understand why it would be 
advisable to allow OSHRC's powers to be delegated to groups of three 
members, where a quorum of two members would be allowed, as HR 2729 
also provides. For the same reasons we support an expansion of OSHRC, 
we cannot support a provision that would allow as few as two members to 
decide issues that can impact worker health and safety.

HR 2730 -- ``Occupational Safety and Health Independent Review of OSHA 
        Citations Act of 2003''
    ASSE agrees that fundamental fairness demands that employers should 
have the opportunity for a fair and independent review of any charge 
against them as envisioned in the legislative history of the 
Occupational Safety and Health Act. Recent case law decisions have 
required OSHRC to defer extensively to the Secretary of Labor's 
interpretation of standards or enforcement actions, which essentially 
alters the burden of proof placed upon employers. This approach is 
corrected by HR 2730, which clarifies that, on appeal, OSHRC's 
decisions ``with respect to all questions of law'' are to be given 
``deference if reasonable.'' OSHRC would then be free to review the 
facts and applicable law de novo.
    ASSE is sympathetic with the intent of HR 2730, but we cannot 
support the bill. Attempting to address the limits on OSHRC's ability 
to review cases is a laudable effort. Yet, the phrase ``if reasonable'' 
only serves to change where the difficult question of appropriate 
review is conducted, not solve it. Frankly, we do not see how these 
provisions can be rewritten to provide the best, appropriate balance. 
If that is the case, ASSE must rely on the judicial decisions have seen 
fit to defer to the Secretary of Labor. While not a perfect solution, 
at least the Secretary of Labor's decisions are more visible to 
Congress and the American people, providing another kind of check and 
balance to inappropriate actions.

HR 2731 -- ``Occupational Safety and Health Small Employer Access to 
        Justice Act of 2003''
    Finally, ASSE has evaluated the expansion of relief under HR 2731, 
which would entitle employers with fewer than 100 employees and $1.5 
million in revenues to attorney fees if they prevail in OSHA 
litigation. ASSE understands that it can be extremely difficult, under 
current law, for small companies to gain relief by establishing that 
OSHA's position was not ``substantially justified'' when going against 
the Office of the Solicitor with a great deal of experience in carrying 
this minimal burden. As a result, small companies may both ``win'' a 
case but ``lose'' because attorney fees could exceed the amount of 
proposed civil penalties. Some added protections for truly small 
employers are needed.
    ASSE supports providing small employers the ability to recover 
attorney fees that HR 2731 proposes. However, ASSE can only support its 
application to truly small employers. The definition of small employer 
in the bill must be lowered to 25 and $1 million in assets. If the 
concern is to address a disproportionate burden placed on small 
employers in challenging OSHA actions, a 100-employee company with $1.5 
million in assets, which the bill defines as a small employer, would 
appear to be able to assume the risk of litigation. Awarding attorneys 
fees is a dramatic step in limiting the power of the government to 
fulfill its enforcement powers and only where experience shows that 
individuals or companies may be powerless. That case can be made for 
truly small employers.

Conclusion
    ASSE appreciates your continued commitment to workplace safety and 
health through your thoughtful consideration of practical, workable 
means that encourage employers to be invested the welfare of their 
employees. ASSE hopes that our comments help you and the Subcommittee 
to determine the best way to meet the goal of these bills. Giving small 
employers new tools to help them work with OSHA in addressing workplace 
safety and health risks is a goal we share with you. As always, ASSE 
appreciates your consideration of these comments and looks forward to 
continued cooperation with you in enhancing workplace safety and 
health.

Sincerely,

James ``Skipper'' Kendrick, CSP
President
American Society of Safety Engineers
                                 ______
                                 

Statement of William Samuel, Legislative Director, American Federation 
of Labor and Congress of Industrial Organizations (AFL-CIO), Submitted 
                             for the Record

    The American Federation of Labor and Congress of Industrial 
Organizations (AFL-CIO), a federation of 64 affiliated unions 
representing 13 million working men and women and their families, 
appreciates the opportunity to submit this testimony in opposition to 
H.R. 2731, the ``Occupational Safety and Health Small Employer Access 
to Justice Act of 2003.''
    H.R. 2731 would amend the Occupational Safety and Health Act (OSH 
Act) to require the Secretary of Labor to pay attorneys' fees and 
expenses to prevailing employers, as defined in the bill, in any 
administrative or judicial proceeding concerning an enforcement action 
initiated by the Occupational Safety and Health Administration (OSHA) 
or a successful legal challenge by the employer to any OSHA rule or 
regulation.
    The AFL-CIO strongly opposes this bill. In our view, the bill is 
misguided and would seriously weaken enforcement of the OSH Act at a 
time when greater, not less, enforcement of the law is sorely needed.
    Each year, millions of workers are injured or made ill from job 
hazards. Sixteen workers die on the job each day, and the number would 
be far higher if deaths from occupational diseases such as cancer and 
black lung disease were included. At its current budget levels, OSHA's 
enforcement reach is severely limited. In fiscal year 2002, 887 federal 
OSHA inspectors conducted 37,565 inspections in workplaces falling 
under federal OSHA's jurisdiction. (State OSHA plans conducted 59,872 
inspections in the workplaces falling within their jurisdiction). At 
its current staffing and inspection levels, it would take federal OSHA 
115 years to inspect each workplace under its jurisdiction just 
once.1
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    \1\ AFL-CIO, Death on the Job: The Toll of Neglect (April 2003), at 
5.
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    The penalties assessed by OSHA for violations of the law are 
exceedingly modest. In fiscal year 2002, OSHA assessed a total of $73 
million in penalties against employers for 78,433 violations of the law 
- an average penalty of only $928. The average penalty for a serious 
violation of the OSH Act, defined as a hazard posing a ``substantial 
probability that death or serious physical harm could result,'' 29 
U.S.C. Sec. 666(k), is only $867 out of a possible $7000.2
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    \2\ AFL-CIO, Death on the Job: The Toll of Neglect (April 2003), at 
4.
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    These statistics show that more, not less, enforcement of the OSHA 
law is needed to protect American workers from job hazards. But H.R. 
2731 would chill enforcement of the law and would divert much-needed 
resources from enforcement and standard-setting to paying the attorneys 
fees and costs of employers that successfully fight an OSHA citation or 
an OSHA rule.
    Under the age-old American Rule, each party to litigation pays its 
own expenses. This is true not only in private litigation but also in 
cases in which the government acts as public prosecutor to enforce 
consumer protection laws, environmental laws, safety and health laws, 
and labor laws. The Equal Access to Justice Act (EAJA) provides a 
limited exception to the American Rule. Under EAJA, organizations with 
no more than 500 employees and a net worth of no more than $7 million, 
can recover their fees and costs if they prevail in administrative or 
judicial proceedings against any United States government agency, but 
only if they meet two conditions. First, an award is proper under EAJA 
only if the agency's position was not substantially justified. Second, 
an award can only be made if there are no special circumstances that 
would make the award unjust. 5 U.S.C. Sec. 504.
    H.R. 2731 would create a special exception from the American Rule, 
and from EAJA, for legal proceedings under the OSH Act. Employers that 
prevailed in administrative or judicial proceedings under the OSH Act 
would be entitled to fees and costs from OSHA without having to show 
that the government's position lacked substantial justification and 
that there are no special circumstances that would make an award 
unjust.
    There is no credible reason for carving out this exception either 
to the American Rule or to EAJA. By subjecting OSHA to the payment of 
attorney's fees and costs every time the agency loses a case to an 
employer falling within the bill's definition, the bill would seriously 
weaken OSHA's effectiveness.
    Notwithstanding the bill's title as being directed to ``small'' 
employers, the bill's reach is broad. It applies to all employers with 
not more than 100 employees and a net worth of not more than $1.5 
million. Bureau of Labor Statistics data for the first quarter of 2000 
show that there were nearly 7.4 million private sector establishments 
with 99 or fewer employees--or 97.7 percent of all private sector 
establishments. In contrast, Congress traditionally defines ``small 
business'' for the purpose of establishing coverage under a range of 
other employment-related laws by imposing a far smaller ceiling on the 
size of the workforce. The Age Discrimination in Employment Act, for 
example, applies to employers who have ``twenty or more employees for 
each working day in each of twenty or more calendar weeks in the 
current or preceding calendar year.'' 29 U.S.C. Sec. 630(b). Title VII 
of the Civil Rights Act, 42 U.S.C. Sec. 2000e(b), covers employers with 
fifteen or more employees. But almost all private sector establishments 
would fall within the employee threshold for coverage established by 
H.R. 2731.
    Nor would the bill's limitation in coverage to employers with less 
than $1.5 million in net worth necessarily limit its broad reach. In 
particular, many businesses in the service sector have limited capital 
assets and would fall within the $1.5 million net worth limit. 
Telemarketing companies, building services providers, and personnel 
agencies are but a few examples of lowcapital industries whose 
employers could fall within the $1.5 million definition (and who would 
similarly fall within the 100-employee threshold). If the definition 
were based on $1.5 million in annual sales as opposed to net worth, 
fully 41 percent of companies would fall within the definition, 
according to Dun & Bradstreet data.
    Statistics under the OSH Act belie any claim that small employers 
are under tremendous pressure to settle OSHA citations in order to 
avoid the high cost of litigating them. First, as already discussed, 
monetary penalties under the OSH Act are exceedingly modest--an average 
of only $928 per violation of the law. Moreover, under the OH Act, the 
penalty may be reduced according to the size of the business. Employers 
with between 1 and 25 employees may receive a penalty reduction of up 
to 60%, while those with between 26 and 100 employees may receive a 
reduction of up to 40%.3
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    \3\ OSHA Instruction CPL 2.103.
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    According to OSHA, the agency awarded $192,494 in EAJA fees during 
Fiscal Years 1987 - 1997, in 28 cases. This amounts to an average EAJA 
award of $6,874, a statistic which hardly shows that employers--small 
or large--have expended huge sums of money in defense of merit's suits 
under the OH Act.
    In fiscal year 2002, employers contested only 8.1 % of all OH Act 
citations issued against them.4 Clearly, this is not because 
they face prohibitively high penalties if they choose to forego 
settlement and pursue their administrative and judicial remedies. But 
H.R. 2731 would provide a monetary incentive for more employers to 
challenge OSHA citations, to spare no expense, and to drag out 
litigation of the case, because at the end of the day they could 
recover their attorneys fees and costs if they prevailed.
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    \4\ BNA Occupational Safety & Health Reporter (Jan. 9, 2003), at S-
9
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    As previously, indicated, EAJA currently provides for fee awards if 
the government's position is not ``substantially justified.'' EAJA thus 
penalizes--and deters--the filing of insubstantial complaints. No 
rational public policy would be furthered by discouraging OSHA from 
issuing citations that are substantially justified, but as to which the 
government ultimately is unable to carry its burden of proof. Rather, 
the inevitable result of such a rule, which would penalize the 
government every time it loses, would be to chill the issuance of 
meritorious citations in close cases on behalf of employees exposed to 
unsafe working conditions.
    It is important to point out that H.R. 2731 is not limited to 
enforcement proceedings initiated by OSHA. By its terms, H.R. 2731 
applies to any administrative or judicial proceeding, meaning that 
qualifying employers could recover their attorneys fees and costs for 
successfully challenging an OSHA standard or regulation in court. While 
OSHA has been quite successful in defending its rules and standards, 
this provision will create a huge financial incentive for businesses to 
fight OSHA's rules even more routinely and aggressively, given the 
possibility of recovering their attorneys fees and costs at the end. As 
a result, OSHA will be even more reluctant to issue much-needed 
workplace safety rules to protect workers.
    Unless H.R. 2731 were accompanied by increased appropriations to 
pay the awards the bill requires, the net effect of enacting this 
legislation would be to diminish the resources available for the 
enforcement of the OSH Act. As previously indicated, OSHA already 
operates under a very tight budget--a budget that this Administration 
repeatedly has sought to cut. Passage of this bill would further reduce 
the resources available for implementing and enforcing the OSH Act, to 
the detriment of working men and women who depend on OSHA to protect 
their safety and health on the job.
    For all these reasons, the AFL-CIO believes that H.R. 2731 is 
misguided and one-sided and should be rejected.

                                 
